29 Nov 2017
FRAMINGHAM, Mass., November 29, 2017 – Worldwide spending on augmented reality and virtual reality (AR/VR) is forecast to reach $17.8 billion in 2018, an increase of nearly 95% over the $9.1 billion International Data Corporation (IDC) expects will be spent this year. A new update to IDC's Worldwide Semiannual Augmented and Virtual Reality Spending Guide also shows that worldwide spending on AR/VR products and services will continue to grow at a similar rate throughout the remainder of the 2017-2021 forecast period, achieving a five-year compound annual growth rate (CAGR) of 98.8%.
"Virtual reality will continue to drive greater levels of spending in the next 12-18 months, as both consumer and commercial use cases gain traction. There is currently a huge appetite from companies that see tremendous potential in the technology, from product design to retail sales to employee training," said Tom Mainelli, program vice president, Devices and AR/VR at IDC. "Meanwhile, the augmented reality market will deliver more modest levels of spending near term with mobile AR on smartphones and tablets likely to garner the most attention from consumers, while head-mounted displays will primarily sell into commercial use cases."
The consumer sector will remain the single largest source of spending for AR/VR products and services with worldwide spending in 2018 expected to reach $6.8 billion. Nearly three quarters of this total will be for VR hardware and software while AR spending will be dominated by software purchases. Gaming will be the dominant AR/VR use case for consumers throughout the forecast period. The five-year CAGR for consumer AR/VR spending will be 45.2% with total spending exceeding $20 billion in 2021.
In contrast, the commercial sectors will represent more than 60% of AR/VR spending in 2018 and grow to more than 85% of the worldwide total in 2021. Each of the five commercial sectors is forecast to undergo triple-digit spending growth throughout the forecast, led by the public sector with a five-year CAGR of 156.7%. The largest of the commercial sectors in 2018 will be distribution and services ($4.1 billion), led by the retail, transportation, and professional services industries. The second largest sector will be manufacturing and resources ($3.2 billion) with balanced spending across the process manufacturing, construction, and discrete manufacturing industries. Retail will be the industry with the largest AR/VR spending in 2018, followed by the process manufacturing and construction industries.
Commercial use cases will vary from sector to sector and industry to industry. In the distribution and services sector, retail showcasing and online retail showcasing will be the two largest use cases with combined spending of more than $950 million in 2018. Online retail showcasing will also experience exceptional spending growth with a five-year CAGR of 225%. Onsite assembly and safety, process manufacturing training, and industrial maintenance will be the largest use cases in the manufacturing and resource sector. In the public sector, infrastructure maintenance and government training will be the two largest use cases in 2018.
"Commercial entities are ready to embrace virtual reality for both customer-facing use cases and internal ones," said Marcus Torchia, research director of IDC Customer Insights & Analysis. "There are a lot of opportunities here to develop commercial-grade hardware and applications that meet the needs of these industries. Meanwhile, phone-based AR is likely to garner most of the excitement for the near term and many companies are already experimenting with AR apps and services. Some of these will be useful, many won't be, but over the course of the next 12–18 months, we should start to see developers beginning to grasp the potential of AR."
On a geographic basis, the United States will be the region with the largest AR/VR spending total in 2018 ($6.4 billion), followed by Asia/Pacific (excluding Japan)(APeJ) ($5.1 billion) and Europe, the Middle East and Africa (EMEA) ($3.0 billion). The U.S. will experience some acceleration in growth over the forecast period, with spending expected to peak in 2020. Meanwhile, APeJ will see its spending growth slow somewhat by the end of the forecast. Both regions will see five-year CAGRs in excess of 100%, trailing Canada (139.9% CAGR) and Central and Eastern Europe (CEE) (113.5% CAGR) as the fastest growing regions. The slowest regional growth will be in Japan, where the CAGR will only reach 36.5%.
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, 26 use cases, and eleven 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 International Data Group (IDG), the world's leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.