Facebook's Oculus Rift consumer edition ships in 2016.
Oculus VR
By John Gaudiosi
January 4, 2016

Although virtual reality and augmented reality have been part of the Consumer Electronics Show for years, 2016 marks the first time CES has a dedicated augmented reality space (encompassing 5,000 square feet), featuring companies like Sony Electronics, Voke VR, and Infinity AR. Microsoft’s HoloLens won’t be at the show, and it’s still uncertain whether Google (goog) will debut Glass 2.0 during its keynote.

The show’s gaming and virtual reality space (covering 22,000 square feet) has grown 68% this year and features 46 exhibitors, including Facebook’s Oculus VR, Virtuix, and NASA.

Shawn DuBravac, chief economist for the Consumer Technology Association (CTA), which puts on CES, forecasts sales of VR and AR headsets will grow from approximately 200,000 in 2015 to over 1.2 million in 2016, which marks a 500% increase. The majority of these sales will come from virtual reality hardware from Samsung (Gear VR), Facebook (Oculus Rift), Sony (PlayStation VR), and the HTC Vive. All of these devices will be on display at CES.

WATCH: LeBron James stars in Samsung’s promo for its Gear VR headset. See more in this Fortune video:

Here are seven ways DuBravac expects VR and AR to change technology in 2016:

From Virtual to Reality

“2016 is the year virtual reality goes live,” DuBravac says. “The category, which is still nascent, is gaining a level of maturity and a broadening of the ecosystem.”

DuBravac says this year will see a focus on the investment in the content, services, and accessories businesses as virtual reality evolves from mobile devices to PC and console platforms. This broadening scope will allow it to be more viable and commercially successful.

A Virtual Reality Holiday 2016

Christmas will bring virtual reality cheer to companies like Sony (sne), Facebook (fb), and HTC (htc), according to DuBravac. Half of the 1.2 million headset sales forecast for 2016 will come during the holiday quarter. Additionally, virtual reality accessories will gain traction as early adopters buy devices to further explore and manipulate virtual worlds.

Video Games Key VR Driver

Both Sony and Microsoft (msft) have a vested interest in virtual reality. Sony has jumped head-on into the market with PlayStation VR, while Microsoft has partnered with Facebook to include Windows 10 functionality and an in-box Xbox One controller for Oculus Rift. Sony’s 30 million PS4s open up a huge VR audience.

“The majority of early VR applications will be gaming,” DuBravac says. “And virtual reality could be a piece of the next generation of game consoles, which are expected to ship around 2018.”

360-Degree Video Cameras Will Flourish

With GoPro(gpro), Nokia(nok), Lytro, and other companies releasing professional 360-degree cameras to film for virtual reality headsets, DuBravac sees both the hardware and content industries growing in 2016. New consumer 360-degree cameras that debut at CES are expected to further broaden the market, which Facebook and Google are already supporting with 360-degree video channels.

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Drones Enter Virtual Reality

Two of the hottest tech categories—drones and virtual reality—are joining forces. Drone virtual reality racing already has the Drone Racing League. And DuBravac believes 360-degree cameras will soon become more the norm for drones, which already ship with high-definition cameras.

Virtual Reality Tourism

Some distributors will be showcasing their CES booths in virtual reality for those who can’t make the trek to Vegas. DuBravac believes this could become the new reality in the future as a great way for companies to connect with customers. And virtual reality is also set to change the tourism industry pretty quickly.

“Hospitality will never be the same,” DuBravac says. “Before booking a cruise you’ll be able to walk into the cabin and tour the entire ship. You’ll no longer be surprised when you walk into a hotel room because you’ll have already experienced it in a VR setting.”

Early Augmented Reality Will Be Driven by Auto Industry

With over 200,000 square feet of space, the automotive section of CES has become a massive show within a show. And DuBravac sees augmented reality becoming a larger part of the auto industry. More tech companies like Nvidia(nvda), Bosch, and Blackberry (bbry) are investing in the automotive space, which will result in a lot of announcements and innovations in this market at the show.


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