Virtual reality just a few decades ago was in sci-fi films and some thought it could never be possible. In the present, many companies have not only made the technology behind it, it is now up and running with short films, less graphical video games and even video conferencing. The companies that will benefit most from this advancement in media, will be the content owners themselves. Think of it from a live event standpoint, like a Motley Crue concert, or a pro wrestling match. Instead of only having 10,000 people pack a venue, people from all around the world can watch just like they are there, from the comfort of their own home.
Live event companies, like WWE, MSG or perhaps MANU will prosper greatly from advances in VR. Attendance revenue will increase dramatically and from that increased form of audience engagement comes other increased revenue streams such as merchandise. All you would have to do is put on your headset, select the game, and voila, you are right there in the mix with the crowd with all the sights and sounds as if you were actually there to watch it live. An argument against it is that people would rather put on the headset and sit at home rather than actually going to the event. I believe the comparison could be the CDs to concert analogy. People, if too far or not enough time of the day, will of course listen to the CD at home or in the car. Going to the live event will most likely always be more expensive than VR. But people will always get more benefit out of actually going to the event rather than being at home. However, I believe overall ticket sales when it comes to revenue per event, and "attendance" will rise over all industries of media. Think of virtual reality as another bonus for streaming.
Two days ago Goldman Sachs (NYSE:GS) wrote that in just ten years virtual reality will take over television in revenue generated, $110 billion as compared to $99 billion by TV. They believe that VR will follow their "accelerated uptake" in which it becomes more commonplace with better technology such as better batteries, less bulky goggles, cellular tech, etc. These estimates are right in line with what Facebook has said it is aiming for with Oculus. With Mark Zuckerberg's apparent obsession nine zeros, he has also said they want to get one billion people with virtual reality sets. With accelerated adaptation in history, shown in adaptation of the radio, TV, computer, internet, social media, then eventually leading its way to virtual reality. The accelerate uptake model that Goldman Sachs is setting up may not be as far-fetched as some analysts might think. However, making sci-fi become reality in terms of hardware looks may "still take a decade or more" as Oculus CEO Brendan Iribe says talking about making VR sets look more like sunglasses.
A great detail to take into account is that Goldman Sachs estimates only takes into account hardware. This is where a great majority of investors are looking, however, a good stake in revenue streams will be going into software. Goldman Sachs estimate of software in ten years is $72 billion. Combined with hardware, that would set up virtual reality to be nearly double the size of the TV market.
Other companies that benefit will be the video game industry. Hardware makers like SNE and MSFT will be able to jump in on selling VR gaming consoles, but ultimately it will be the creators of the VR games that will get the glory. New immersive MMORPG and action games by developers like ATVI or EA. Players finally able to play through the eyes of their medieval character or favorite quarterback will definitely be the next generation of gaming.
The uses for virtual reality are everywhere, literally everywhere. If you are trying to avoid risk by not going full investment into a startup VR firm, investing in a content maker can provide a nice return, for example, World Wrestling Entertainment because of their streaming platform and live events, or maybe Madison Square Garden for the large events done in their arena.
Regardless of how, invest in VR somehow. You can find startup VR firms like (NYSE:DDD) who is not only making 3D printing a reality, but are also incorporating virtual reality. Investors can take a safer route and invest in some more cemented companies that are starting to revenue from virtual reality like (NASDAQ:GOOG) or (NASDAQ:FB). I think a lot of the money will to companies that will be producing the content seen through these headsets.
An index I have made is comprised of , , small amount in , (AMZN/NFLX), and .
Disclosure: I am/we are long WWE.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.