European spending on augmented reality (AR) and virtual reality (VR) is forecast to reach $8.4 billion by 2027, reflecting steady growth according to a recent report by IDC. The 22.4% five-year compound annual growth rate (CAGR) projected indicates ongoing adoption of immersive technologies across industries, with VR expanding slightly faster than AR.
The manufacturing and transportation sectors are expected to lead AR spending, using the technology for purposes such as asset maintenance, communication, and training. The central government sector may see the fastest AR spending growth next year as cities deploy smart city projects. Retail will likely be the top commercial spender on VR, as online retailers continue enhancing customer experiences with interactive 3D product views and customization. Recent headset launches could further boost interest.
Across sectors, training is poised to be the most common use case for VR technology, as remote work and hybrid setups drive investment in collaboration tools. While tempered by economic uncertainty in Europe, IDC anticipates organizations will still allocate immersive technology budgets to differentiate offerings and improve productivity.