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Spending on augmented and virtual reality has reached unprecedented levels.

Investment in these two areas has already eclipsed $1.1 billion after just two months of 2016, according to Digi-Capital. For perspective, spending on AR and VR has never surpassed $1 billion in a single calendar year, and the number reached just $692 million in 2015.

It's clear that interest in AR and VR is booming as major tech companies are trying to secure a place in this nascent market. Goldman Sachs has estimated that the AR/VR market will reach $80 billion by 2025, which makes sense considering that heavy hitters such as Facebook, Sony, HTC, Microsoft, Google, and Samsung are all getting into the space.

Much of the consumer interest has centered on VR, but AR seems to be drawing the interest of investors. Magic Leap, a U.S. startup that develops AR tech, has received the largest piece of the pie in the last 14 months. Worldwide powers such as Google and Alibaba, among others, have invested $1.39 billion in the company, including an $800 million Round C in February.

AR likely has a leg up because it offers more future use cases than VR, notes Laurie Beaver, research associate for BI Intelligence, Business Insider's premium research service. VR completely engages users in a virtual world, but AR projects images and information onto the real world.

Adoption of both of these technologies is likely to be slow at first, thanks in part to the high cost of the hardware involved, but once the ball starts rolling, be prepared for AR and VR to change the way we interact with our world.

BI Intelligence has compiled a detailed report on virtual reality hardware that provides proprietary forecasts for VR headset shipments and revenue and estimates average selling price over the next five years. The report also takes a look at the different types of VR headset technology now on the market, discusses which categories will win out, and looks at several use cases for VR headsets, including gaming and other.

Here are some key points from the report:

Virtual Reality (VR) headsets are debuting on the consumer market and set to launch an advanced and immersive content platform. We estimate shipments of VR headsets will grow at a swift 99% compound annual growth rate between 2015 and 2020.

VR shipments will create a $2.8 billion hardware market by 2020, up from an estimated $37 million market this year.

VR headsets are a fairly low-cost consumer electronics category, and this will help drive adoption. The devices will be priced similarly to smartwatches and also need to pair with another standalone computing device.

Demand for VR headsets will be fueled by gaming on both mobile and console devices. There are 1.2 billion gamers worldwide, including nearly 1 billion mobile gamers alone. This creates a direct, addressable market for VR headsets.

Beyond gaming, VR will be an important platform for streaming content and even shopping. Oculus has already experimented with Story Studio, a platform for VR movie creation. In addition, many consumers claim the VR experience will drive them to shop more online rather than in stores.

In full, the report:

Forecasts annual shipments of VR headsets between 2015 and 2020.

Sizes the market for VR headset shipments by revenue and anticipates how the VR headset average selling price will trend.

Breaks down VR headset shipments by category, including traditional VR headsets, smartphone-mounted VR headsets, and gaming-console headsets.

Pinpoints the gaming console market as a key driver of demand for VR headsets.

Discusses the opportunity for VR content creation in gaming, streaming video, and shopping.

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