The market for virtual reality (VR) technology could be a trillion-dollar industry by the year 2035, according to new research from a forward-looking analysis unit of the investment bank Citi.

Citi's report arrived the same week that Sony released the PlayStation VR, a virtual reality headset aimed at owners of its video game console. 2016 has seen other high-profile headsets released by competitors, including the Oculus Rift and the HTC Vive. Augmented reality (AR) tech, such as Microsoft HoloLens, are not far behind.

"VR/AR is now firmly on the radar as an investment theme and is expanding as an industry and we believe it will be used in a wide range of applications and in a number of different industries going forward," Kathleen Boyle, managing editor of Citi GPS (Global Perspectives & Solutions), said in the report on Thursday.

In fact, VR technology is already making its impact felt in several ways, with many companies exploring its applications. Beyond gaming and entertainment, VR is being used in the tourism sector, for education and in health care.

In addition, DeLoitte published a survey in August which found 88 percent of mid-market companies (firms with annual revenue of between $100 million and $1 billion) were using some form of virtual or augmented reality as part of their business.

Citi predicts hardware sales, specifically of headsets, will be the primary driver of the industry's growth and the VR and AR market will be worth $692 billion by 2025, rising to more than a trillion by the following decade.

"Given the global e-commerce and m-commerce (mobile commerce) market is currently around $1 trillion, and is expected to rise to $4 trillion by 2030, even if VR/AR only gets a small percentage of the market, it would be a significant driver to the growth of the VR/AR market overall," explained Boyle.

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