03 Feb 2021

Asia Pacific* Augmented and Virtual Reality IT Spending Picks up in Second Half of 2020 and Expected to Reach $28.8 Billion in 2024, IDC Reports

SINGAPORE, February 04th, 2021 – The recent release of the IDC Worldwide Augmented and Virtual Reality Spending Guide forecasts Asia/Pacific* spending on augmented reality and virtual reality (AR/VR) to grow rapidly at a compound annual growth rate (CAGR) of 47.7% (2019-2024) and reach $28.8 billion by 2024. This growth is primarily driven by the AR/VR technology capabilities addressing the issues of different industries in current COVID-19 scenario and creating immense opportunities throughout the forecast.

“The restrictions imposed due to the pandemic urged many organizations to rely on technologies to support their business processes/functions such as customer service, remote health, and minimized in-person meetings among others. With this, there was strong new demand across many industries for AR/VR technology in the market – especially in the second half of 2020,” says Ritika Srivastava, Associate Market Analyst at IDC Asia/Pacific.

Commercial segment surpassed consumer AR/VR spending last year and will continue to account for a larger share of the spending. However, consumer spending is also forecasted to grow significantly with a CAGR of 43.2% between 2019 – 2024. The industry that is leading the most projects/implementation in Asia/Pacific* is Education, with online virtual teaching turning out to be a more engaging experience for students. It is then closely followed by Retail, and Discrete Manufacturing – the three industries encompass close to 50% of the overall commercial sector in 2020.

There are numerous diverse industries that have significant ability to grow at a quicker rate over the forecast period (2019-2024) with some of the new use cases in the works. Banking (313.7% CAGR) followed by Federal/Central Government, Healthcare Provider, and Securities and Investment Services are the industries that are picking up momentum to delve into the new use cases and are profitable in terms of ROI optimization. Use-cases that participated in practical tasks with the support of the Augmented Reality for executing tasks like training have an abundance of impulse within the industries.

Virtual reality games are a leading use case in 2020, with more than one-third of the overall AR/VR technology market being one of the top entertainment sources in 2020 – owing to the limitations of physical interaction due to pandemic. This is followed by training, and video/feature viewing (VR) use cases. However, emergency response and internal videography are the fastest growing use cases in terms of compound annual growth rate over the forecast (2019-2024).

From a technology standpoint, hardware including host devices and viewers will contributes to almost two-thirds of overall AR/VR spending by 2024 – dipping in share as software and services gain momentum. Services spending will see strong growth across the forecasted period (CAGR 62.4%) for systems integration, followed by custom application development and consulting services, while software spending will have a CAGR of 63.8%.

From the two reality types of perspective, spending in VR solutions will be greater than that of AR solutions initially. Though, strong growth in AR hardware, software, and services spending (118.0% CAGR) will push overall AR spending well ahead of VR spending by the end of the forecast period 2019- 2024.

During the pandemic AR/VR showed great potential and played a critical role in digital transformation (DX) efforts of many organizations across industries. Doctors using mixed reality to solve several problems during the on-going pandemic were among the focus areas of investments in AR/VR technology. In addition, remote working, virtual events, and more augmented customer engagement use cases will bring demand for implementing AR/VR technology in future.

“With customer and employee engagement gaining prominence, spending intent on AR/VR is rapidly accelerating. Organizations need to develop a vision and devise a resilient strategy for deploying AR/VR as enablement tools to achieve strategic priorities," adds Deepan Pathy, Research Manager, Future of Work, AR/VR and Mobility research at IDC Asia/Pacific.

As organizations plan their return to workplace strategies, ensuring a safe workplace for employees will be a top of agenda item for business leaders and creating a contactless/touchless workplace environment will be crucial. AR/VR will be a key enabler in creating a workplace that can minimize person-to-person interaction, with initiatives such as virtual conferences, enable remote support and device management, AR aided retail shopping, etc.

On a geographic basis, China market will represent the largest AR/VR spending in the Asia/Pacific* region – with more than 90% share in 2020, and spending is projected to take off at a five-year CAGR of 47.1% over the forecast period (2019-2024). Furthermore, AR/VR technology in ASEAN countries has started gaining prominence and has partnered with AR/VR enterprises to improve the industry experience.

The Worldwide Augmented and Virtual Reality Spending Guide examines the AR/VR opportunity and provides insights into this rapidly growing market and how the market will develop over the next five years. Revenue data is available for 9 regions, 20 industries, 47 use cases, and 12 technology categories. The V2 2020 release of the Worldwide ARVR Spending Guide incorporates IDC's secondary assessment of the COVID-19 pandemic impact on IT market forecasts. The assessment considers the broad impact of the pandemic across technology markets and distilled those leading forecasts through the lens of the ARVR market.

*Note: Asia/Pacific excluding Japan

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About IDC Spending Guides

IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.

For more information about IDC's Spending Guides, please contact Monika Kumar at mkumar@idc.com.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading tech media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC  and LinkedIn. Subscribe to the IDC Blog for industry news and insights: http://bit.ly/IDCBlog_Subscribe.

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