Market Trends

Worldwide Revenues for AR and VR to Increase $156.8 Billion by 2020

Worldwide revenues for the augmented reality (AR) and virtual reality (VR) markets are expected to grow from $5.2 billion in 2016 to more than $162 billion in 2020, according to research done by the International Data Corp. (IDC).

The $156.8 billion increase represents a compound annual growth rate of 181.3 percent over the 2015-20 forecast period. IDC’s new spending guide expands on previous AR/VR forecasts by offering greater detail of revenues by technology, industry and geography, the Massachusetts-based market research company said in a news release.

“For many years, augmented and virtual reality were the stuff of science fiction,” said Chris Chute, vice president of customer insights and analysis at IDC, in a prepared statement. “Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences …. Over the next five years we expect to see that promise become realized in … fields like education, logistics and manufacturing.”

According to IDC’s “Worldwide Semiannual Augmented and Virtual Reality Spending Guide,” sales of AR/VR hardware will generate more than 50 percent of worldwide revenues throughout the forecast period. AR/VR software revenues will also get off to a quick start, growing more than 200 percent year over year in 2016, but will quickly be overtaken by service revenues in the middle years of the forecast, as logistics and manufacturing demand enterprise-class support.

“The rise of new, less expensive hardware will put virtual and augmented reality technology within the grasp of a growing number of companies and individuals,” said Tom Mainelli, vice president of Devices & AR/VR for IDC, in a prepared statement. “But as always, what people can do with that hardware will depend upon the applications and services that power it. In the coming years, we expect developers to create a wide range of new experiences for these devices that will fundamentally change the way many of us do work.”

Revenues for VR systems —  including viewers, software, consulting services and systems integration services — are forecast to be greater than AR-related revenues in 2016 and 2017, largely due to consumer uptake of games and paid content, IDC said. After 2017, AR revenues are anticipated to surge ahead, hitting critical mass in healthcare delivery and product design and management-related use cases.

Regionally, Asia/Pacific (excluding Japan), the United States and Western Europe are expected to account for three quarters of worldwide AR/VR revenues. The three regions will generate comparable revenue amounts in 2016, but the United States is forecast to pull well ahead of the other two regions by 2020. Because AR/VR technology is still in the early stages of adoption, every region is expected to see annual growth of more than 100 percent throughout the forecast period.

The “Worldwide Semiannual Augmented and Virtual Reality Spending Guide” is available for a fee; more information can be found on the IDC website. The study offers specific revenue data for eight regions, 10 industries, 18 use cases and 10 technology categories.

About the Author

Richard Chang is associate editor of THE Journal. He can be reached at [email protected].