27 Feb 2017
FRAMINGHAM, Mass., February 27, 2017 – A new update to the Worldwide Semiannual Augmented and Virtual Reality Spending Guide from the International Data Corporation (IDC) forecasts worldwide revenues for the augmented reality and virtual reality (AR/VR) market to reach $13.9 billion in 2017, an increase of 130.5% over the $6.1 billion spent in 2016. AR/VR spending is expected to accelerate over the next several years, achieving a compound annual growth rate (CAGR) of 198.0% over the 2015-2020 forecast period and totaling $143.3 billion in 2020.
"AR and VR headsets get most of the media attention right now, but the hardware is only as good as the software and services running on it," said Tom Mainelli, program vice president, Devices and AR/VR. "On the virtual reality side, producers are quickly moving beyond games to create new content mainstream audiences will embrace. And on the augmented reality side of the fence we're seeing commercial entities begin to more seriously evaluate the technology and begin to test the waters of app development.”
The consumer market will be the largest AR/VR segment throughout the forecast period with worldwide spending on hardware, software, and services expected to reach $6.2 billion in 2017, an increase of 130.5% over 2016. Industry spending will trail consumer spending as virtual and augmented reality applications slowly find their way into everyday use. Discrete manufacturing and retail are expected to be the only two industries spending more than $1.0 billion on AR/VR solutions this year. Driven by a five-year CAGR of 238.7%, retail will move ahead of discrete manufacturing to become the top industry for AR/VR spending in 2020. Similarly, process manufacturing will move into to the number three position in 2020, overtaking personal and consumer services. Following retail, the industries that will experience the fastest growth over the forecast are transportation (233.7% CAGR) and healthcare providers (231.8% CAGR).
The industry use cases that will attract the largest investments in 2017 are retail showcasing ($461 million), product development ($267 million), and industrial maintenance ($249 million). By 2020, online retail showcasing will join retail showcasing and produce development as one of the largest use cases with a five-year CAGR of 403%. On the consumer side, AR games will experience a CAGR of 287.4%, making it one of the fastest growing AR/VR categories over the forecast period.
Spending on VR systems, including viewers, software, consulting services, and systems integration services, are forecast to be greater than AR-related spending in 2017 and 2018, largely due to consumer uptake of games and paid content. After 2018, AR spending will surge ahead, hitting stride in healthcare delivery, product design, and management-related use cases.
"Early enterprise adopters have often rolled their own tools and applications, while commercial AR & VR enterprise offerings develop. At this stage to make the transition to a robust technology spending environment, third-party custom application development and systems integration will fill a vital role in bringing projects to life," added Marcus Torchia, research director, Customer Insights and Analysis. "We expect initial AR spending to lean on mobile workforce-based use cases, where AR headsets are a natural enhancement to existing mobility investments. And we will see education, research and design applications form a foundation of adoption in professional environments."
On a geographic basis, the United States will deliver $4.3 billion in AR/VR spending in 2017, followed by Asia/Pacific (excluding Japan)(APeJ) at $2.6 billion and Western Europe at nearly $2.5 billion. The consumer market will be the largest segment of AR/VR spending in all three regions in 2017, followed by personal and consumer services in APeJ and discrete manufacturing in the United States and Western Europe. By 2020, discrete manufacturing will become the top spending segment in the United States while retail will become the second largest segment in APeJ.
The Worldwide Semiannual 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 eight regions, 12 industries, 18 use cases, and ten technology categories. Unlike any other research in the industry, the comprehensive spending guide was created to help IT decision makers to clearly understand the industry-specific scope and direction of AR/VR expenditures today and in the future.
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.
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 IDG, the world's leading technology media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.