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Sales of AR/VR hardware are expected to generate more than 50% of worldwide revenues throughout the forecast period.
Worldwide revenues for the augmented reality and virtual reality (AR/VR) market are expected to increase from $5.2 billion in 2016 to more than $162 billion in 2020 according to latest forecasts from IDC.
This represents a compound annual growth rate (CAGR) of 181.3% over the 2015-2020 forecast period. Sales of AR/VR hardware are expected to generate more than 50% of worldwide revenues throughout the forecast period. AR/VR software revenues will increase more than 200% year-on-year in 2016, but will be overtaken by services revenues in the middle years of the forecast, as logistics and manufacturing demand enterprise-class support.
Revenues for VR systems, including viewers, software, consulting services and systems integration services, are forecast to be greater than AR-related revenues in 2016 and 2017, largely due to consumer uptake of games and paid content. After 2017, AR revenues will surge ahead, hitting critical mass in healthcare delivery and product design and management-related use cases.
Chris Chute, VP of customer insights and analysis at IDC, noted that augmented and virtual reality had been the “stuff of science fiction” for many years.
“Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences,” said Chute.
He also noted that recent developments in healthcare demonstrated the powerful impact that augmented reality headsets can have at the industry level.
“Over the next five years we expect to see that promise become realised in other fields like education, logistics, and manufacturing," Chute said.
Tom Mainelli, vice president of devices and AR/VR at the research company, added that the arrival of less expensive hardware will put virtual and augmented reality technology within the grasp of a growing numbers of companies and individuals.
"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," Mainelli said.
