IDC has released its Worldwide Semiannual Augmented and Virtual Reality Spending Guide, which forecasts that the market could reach staggering heights of $162 billion by 2020, compared to its current $5.2 billion in 2016. The current state of the 'early adoption' market shows, as the compound annual growth rate is expected to hit 181.3% as the technology evolves.
According to the report, virtual reality (VR) systems will form the bulk of the revenue growth through viewers, software, consulting services and systems integrations, particularly as consumers increase game and paid content uptake.
The report says that augmented reality (AR) revenues will hit 'critical mass' after 2017, through extensive use in healthcare delivery, product design and product management.
"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. 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," says Chris Chute, vice president, Customer Insights and Analysis.
IDC believes that AR and VR hardware will be the focus of more than 50% of global revenues between 2015-2020. Software revenues are forecast to hit a 200% growth rate in 2016, but will fall out of the spotlight as enterprises look to service revenues through logistics and manufacturing demand.
"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. 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," says Tom Mainelli, vice president, Devices & AR/VR.
IDC forecasts the market growth will be spread across the Asia Pacific region (excluding Japan), the United States and Western Europe, which will account for three quarters of the growth across 2016. By 2020, the United States will be the dominant market.