Augmented and virtual reality revenues to hit US$162 billion in 2020

Rebecca Gibson
Rebecca Gibson
By Rebecca Gibson on 16 August 2016
Augmented and virtual reality revenues to hit US$162 billion in 2020

Worldwide revenues for the augmented reality and virtual reality (AR/VR) market will grow from US$5.2 billion in 2016 to more than US$162 billion in 2020, according to IDC.

The new Worldwide Semiannual Augmented and Virtual Reality Spending Guide predicted that sales of AR/VR hardware, such as Microsoft HoloLens, will generate more than 50% of worldwide revenues between 2016 and 2020. Revenues will jump more than 200% year over year in 2016, but will quickly be overtaken by services revenues in the middle years of the forecast, as logistics and manufacturing demand enterprise-class support.

IDC expects revenues for VR systems – which include viewers, software, consulting services and systems integration services – to be greater than AR-related revenues in 2016 and 2017. However, AR revenues will surge ahead in 2018, hitting critical mass in healthcare delivery and product design and management-related use cases.

“For many years augmented and virtual reality were the stuff of science fiction; now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences,” said Chris Chute, vice president of customer insights and analysis at IDC. “Recent developments in healthcare demonstrated the powerful impact augmented reality headsets can have at the industry level, and over the next five years we expect to see that promise become realised in other fields like education, logistics, and manufacturing.”

“The rise of new, less expensive hardware will put VR/AR technology within the grasp of a growing numbers of companies and individuals,” said Tom Mainelli, vice president of devices and AR/VR at IDC. “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.”

The US, Western Europe and Asia-Pacific (excluding Japan) will account for 75% of worldwide AR/VR revenues. Although all three regions will generate comparable revenue amounts in 2016, US sales are predicted to spike well ahead of the other two by 2020. As AR/VR technology is still in the early stages of adoption, every region is expected to see annual growth of more than 100% throughout the forecast period.

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