21 May 2021

European Spending on Augmented and Virtual Reality Forecast to Resume Strong Growth

According to the most recent release of the Worldwide Augmented and Virtual Reality Spending Guide published by International Data Corporation (IDC), European spending on augmented reality and virtual reality (AR/VR) will grow 88.6% year on year in 2021, reaching $2.8 billion. The long-term expectations are even more positive, as IDC forecasts a five-year (2020-2025) compound annual growth rate (CAGR) in AR/VR spending of 69.9% in Europe, for a total value of $20.9 billion by the end of the forecast period.

During the recession caused by COVID-19, the AR/VR adoption dynamic in Europe slowed slightly across various industries, but the reduced growth rate was a short-term effect. Spending on AR/VR will remain positive, with double-digit and triple-digit growth rates across all verticals, throughout the forecast period. "The pandemic pushed some organizations to re-assess their technology adoption priorities and digitalization plans, allocating more resources to other areas in order to keep their businesses sustainable in an uncertain environment," notes Lubomir Dimitrov, senior research analyst with IDC European Customer Insights & Analysis. "The slump in AR/VR uptake is temporary, and we expect demand to accelerate very quickly. Companies will leverage AR/VR technologies to recover from the recession and to transform digitally, adapting their businesses to make them more efficient and competitive," adds Dimitrov.

Although the consumer segment will still account for more than half of the AR/VR spending in Europe in 2021, spending in the commercial segment in expected to surpass consumer AR/VR spending in the long term, with a forecast CAGR of 93.4% between 2021 and 2025.

The fastest growing industries in Europe in terms of spending over the forecast period will be wholesale (135.1% CAGR), followed by securities and investment services (127.7% CAGR) and resource industries (125.5% CAGR).



In the recently published AR/VR spending guide, the Others use case, formerly a single use case per industry for AR and VR each, was segmented into three — Back-Office Support and Infrastructure Other, Customer Experience Other, and Innovate, Scale, Operate Other.

Within the commercial segment, VR games and video/feature viewing use cases together will account for more than 40% of all AR/VR spending in Europe in 2021. In the long term, the commercial use cases that are forecast to receive the largest investments in 2025 are Innovate, Scale, Operate Other and Customer Experience Other, which are expected to collectively account for almost half of the AR/VR spending in Europe. The use cases that will see the fastest spending growth in Europe over the forecast period are back-office support and infrastructure (152.6% CAGR) and Innovate, Scale, Operate Other (135.2% CAGR).

In terms of the reality type split, spending on VR solutions in Europe in 2021 will continue to represent the highest market share of around 80%. During the forecast period, AR spending is expected to grow faster than spending on VR, and based on a CAGR of 119.6%, AR will achieve 57% market share in 2025.

In terms of technologies, hardware is expected to maintain the largest share in the following years, with more than 60% of the total AR/VR spending in Europe. Software will hold on to second place, while services spending will remain under 10%, making it the lowest share category — although it will record the fastest growth, driven by systems integration and consulting services spending, with a CAGR of 92.6% over the forecast period.

The Worldwide Augmented and Virtual Reality Spending Guide examines the augmented reality and virtual reality (AR/VR) opportunity and provides insights into this rapidly growing market and how it will develop over the next five years. Revenue data is available for nine regions, 20 industries, 47 use cases, six technology categories, and two reality types. Unlike any other research in the industry, IDC's comprehensive Spending Guide was created to help IT decision makers clearly understand the industry-specific scope and direction of AR/VR expenditures today and in the future.

For more information on the IDC Worldwide Augmented and Virtual Reality Spending Guide, please contact Marcus Torchia mtorchia@idc.com or Stacey Soohoo ssoohoo@idc.com. For more information on the IDC European Augmented and Virtual Reality Spending Guide, please contact Lubomir Dimitrov ldimitrov@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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