A version of this essay was originally published at Tech.pinions, a website dedicated to informed opinions, insight and perspective on the tech industry.

This week in Los Angeles, I attended the first ever Vision Summit, a gathering of individuals and organizations working in and on virtual reality (VR) and augmented reality (AR). The opening keynote featured executives from key players such as Oculus, Sony, Google, NASA and Valve.

Unity Technologies hosted the event, and during the keynote, the company’s CEO, John Riccitiello, said something remarkable. He said there is too much hype around AR/VR today. He said that unrealistic expectations threaten the enormous long-term potential he sees for the technologies and the market.

I couldn’t agree more.

Riccitiello went on to cite a January 2015 forecast that showed a VR-hardware installed base of nearly 40 million units by the end of 2016. I’m not going to cast stones regarding that forecast, as it is more than a year old. Also, as anyone who has attempted to predict a market where devices haven’t started shipping yet knows, it’s a messy business of slipped launched dates and broken assumptions. Suffice to say, this number is simply too high.

As anyone who has attempted to predict a market where devices haven’t started shipping yet knows, it’s a messy business of slipped launched dates and broken assumptions.

The problem with such outsized projections for a nascent market is that when actual shipments fail to reach that total, some will suggest that the market isn’t living up to its potential, or that it’s merely a fad. Riccitiello called the difference between such a forecast and then the eventual reality the “gap of disappointment.” He went on to say he thinks VR growth will take longer, but ultimately, the market will be bigger than analysts are currently predicting.

I’m not as convinced about that last point yet. But after two days of deep dives on the topic of VR, I do have some key takeaways that will help drive my future forecast. They include:

Screenless VR viewers will drive early volume

There was a fair amount of hand-wringing by tech pundits when Oculus announced the $600 shipping price of its first consumer Rift product at CES. People complained the price was too high. The company still presold all of the units it made available, but the reaction was telling regarding the willingness of mainstream users to spend that amount of money for VR. Plus, you need a PC with high-end graphics and plenty of computing power to get the best experience.

For mainstream users, screenless viewers such as Samsung’s $100 Gear VR are the obvious first step. As Tim Bajarin noted in a column late last year, the experience on the Gear VR is pretty good. It is also a clear step up from even more basic experiences, such as Google Cardboard. In 2016, expect to see a range of devices with similar capabilities to Gear VR, for a wider range of phones and at lower price points. I expect the Chinese smartphone vendors to embrace this category with gusto.

Tethered head-mounted-displays (HMDs) will have a slower ramp

As noted, in 2016 we’ll see Oculus ship, as well as HTC’s Vive and Sony’s PlayStation VR. I call these products tethered HMDs (head-mounted displays). Like Oculus, Vive will require a high-end PC; Sony’s product will need a Playstation 4. At the event, Sony executives pointed out that the company has already shipped 36 million PlayStation 4s. This installed base, along with the plug-and-play nature of the product, will give Sony’s product a distinct advantage out of the gate. But over time, the PS4 installed base will grow at a much slower pace than that of the VR-capable PCs. The high price of all three products will necessarily limit the total available market here. A critical question going forward: How long will the tethered experience require a PC or console? In other words, how soon will we see phone-tethered options in the market, and what level of experience will they drive?

Touch interaction is critical; balance is tricky

While I was sitting in on several developer sessions, a key theme developed: The fact the first three major tethered HMDs all have touch-based control options with similar features is telling. Fundamentally, establishing a presence in a virtual reality requires the ability to interact with that reality in ways that feel as natural as possible. Being thrust into a reality with no hands — or at least controllers acting as hands — is severely limiting. One developer, working on a cross-platform game for the HTC, Sony and Oculus, noted that while the touch controllers for each product look different, they all have similar basic interaction modes, which points to a certain fundamental correctness of the approach. Robust touch capabilities will be an area where screenless viewers will consistently struggle to compete with the larger tethered rigs.

A critical question going forward: How long will the tethered experience require a PC or console?

One of the more interesting sessions covered one developer’s attempts to address a fundamental challenge for achieving virtual reality’s holy grail of total immersion: Tricking the body’s sense of balance. While today’s VR can address sight and sound well, touch to a limited extent, and taste and smell not at all, what he called the “sixth sense” of balance is very hard to fool. Essentially, our vestibular system or inner ear is our gyroscope that tracks the angle of the head and body. When that angle doesn’t match what our eyes or ears are telling us, a disconnect occurs that, at best, breaks the sense of immersion and, at worst, makes you dizzy. To fix this problem, VR will require wireless HMDs combined with advanced motion capture and new motion-mimicking algorithms. This problem will likely take years to address.

Finally, content is king

The industry can talk at length about hardware advances and improvements in the software capabilities of the technology. But if the content isn’t there, none of this will matter. Based on the awards event hosted at the Summit, interesting content already exists, and much more is on the way. At the moment, much of this content is driven by independent developers and producers. It’s not hard to see why Hollywood, burned by 3-D, is taking a more cautious approach to virtual reality. The simple reality is you can’t just port old content and expect a good experience. The key here, espoused by numerous speakers, is the fundamental understanding that everything, from documentaries to Hollywood movies to games to instructional videos, will require a new type of storytelling in VR.

It’s not hard to see why Hollywood, burned by 3-D, is taking a more cautious approach to virtual reality. The simple reality is you can’t just port old content and expect a good experience.

In the end, two days at the Vision Summit left me with a significantly more evolved view of both the VR and AR market. The bottom line is that VR is clearly going to ramp sooner than AR, and it’s going to be driven by consumers first. The hardware winners and the exact angle of that adoption curve will become clearer in the next 12 months, and market watchers should beware of outsized expectations. Further, while AR also has a bright future, in the near term, many early use cases will be driven by traditional phones and tablets, while next-generation head-mounted AR displays will launch first in commercial settings where companies will absorb higher prices and technical challenges in exchange for greater productivity and other benefits.

Tom Mainelli has covered the technology industry since 1995. He manages IDC’s Devices and Displays group, which covers a broad range of hardware categories including PCs, tablets, smartphones, thin clients, displays and wearables. Mainelli is also driving new research at IDC around the technologies of augmented and virtual reality. Reach him @TomMainelli.