Whist I agree with you on the business side, I think for gaming, VR rather than AR is going to dominate.
AR isn't immersive and that's by design, so for most games, VR will always trump AR (imho). In fact I suspect most genres of games wouldn't be playable in AR at all, or at least not very well.
I could see AR being good for table top type games, games with a 3rd person, top down type view, such as strategy games etc. But that''s a fairy small market. For anything first person, or role playing type game, which covers a huge chunk of the gaming market, I can't see how AR could be used effectively there, being able to see you're still in your living room, would just break any immersion.
But all this being said, VR (other than for cockpit type games), needs to be room-scale. Sitting in a seat with an XBox controller in hand, is doing VR a disservice currently, even potentially damaging a new market by imposing restrictions that shouldn't really be there.
From your comment, (cockpits and moving characters in-game when you are not moving), I'm guessing your experience is limited to the Rift, so seated or standing, using an XBox controller? If so I suggest you go out to a PC World or similar, where they have the HTC Vive on display and give room-scale with motion controllers a go. It changes VR completely, and makes the Rift look positively dated in comparison (although I will admit the Rifts headset does look better than the Vives!).