AR/VR Will Grow at More Than a 180% CAGR

IDC projects worldwide revenues from augmented (AR) and virtual (VR) reality growing from $5.2 billion this year to more than $162 billion in 2020. This represents a CAGR of 181.3% over the five-year period.

“[T]he consumer market is primed for new paid and user-generated content-driven experiences,” said Chris Chute of IDC, referring to the ability of many modern smartphones to show VR content. In addition, AR is seeing increasing use in healthcare applications. IDC expects AR to be used in many other industries in the coming years, including education, logistics and manufacturing.

“The rise of new, less expensive hardware will put virtual and augmented reality technology within the grasp of a growing numbers of companies and individuals,” said Tom Mainelli, IDC VP. However, applications and services will be important in dictating what can be done with it. IDC forecasts new experiences being developed that will “fundamentally change the way many of us do work.”

Sales of AR and VR devices will generate more than 50% of AR/VR revenue through the forecast period. Software revenues will begin quickly – growing more than 200% YoY in 2016 – but will be overtaken by services revenue in the middle of the forecast.

IDC expects VR revenues to be greater than AR revenues in 2016 and 2017 – largely due to consumer adoption. AR will surge ahead after 2017, however, hitting ‘critical mass’ in healthcare delivery and product design and management-related use cases.

Regionally, APACxJ, the USA and Western Europe will represent 75% of worldwide AR/VR revenues. They will be roughly equal in 2016, but the USA is expected to pull well ahead of the other regions by 2020. However, every region is expected to see growth of more than 100% through the forecast period, due to the newness of the technologies.