Spending on AR and VR Expected to Surpass $20 Billion in 2019
Worldwide spending on AR/VR is forecast to be nearly $20.4 billion in 2019, an increase of 68.8% over the $12.1 billion IDC expects was spent in 2018. The latest update also shows that worldwide spending on AR/VR products and services will continue this strong growth throughout the 2017-2022 forecast period, achieving a five-year compound annual growth rate (CAGR) of 69.6%.
Worldwide spending on AR/VR solutions will be led by the commercial sectors, which will see its combined share of overall spending grow from 64.5% in 2019 to more than 80% in 2022. The industries that are expected to spend the most on AR/VR in 2019 include personal and consumer services ($1.6 billion), retail ($1.56 billion), and discrete manufacturing ($1.54 billion).
Ten industries are forecast to deliver CAGRs of more than 100% over the five-year forecast period, including state/local government (123.7% CAGR), resource industries (120.9% CAGR), and wholesale (120.9% CAGR). Consumer spending on AR/VR will continue to be greater than any single industry ($7.2 billion in 2019) but will grow at a much slower pace (36.6% CAGR).
Consumer spending volume will determine three of the four largest AR/VR use cases in 2019: virtual reality games ($4.0 billion), video/feature viewing ($2.0 billion), and augmented reality games ($616 million). The only commercial use case to crack the top 4 in 2019 will be training ($1.8 billion), but two other commercial applications, online retail showcasing ($558 million) and industrial maintenance ($413 million), will become firmly established.
With a five-year CAGR of 119.2%, industrial maintenance spending will nearly overtake augmented reality gaming in 2022. Several other commercial use cases (lab and field, retail showcasing, anatomy diagnostics, and internal videography) are forecast to see CAGRs greater than 100% over the forecast period.
Hardware will account for more than half of all AR/VR spending throughout the forecast, followed by software and services. The largest category of hardware spending will be host devices, but AR viewers will make notable gains with a five-year CAGR of 128.3%. AR software spending will make similar gains with a five-year CAGR of 121.8%, overtaking VR software by 2021.
Services spending will be bolstered by strong CAGRs for AR custom application development (133.0%), AR systems integration (130.4%), and AR consulting services (121.9%). The strong growth in AR hardware, software and services spending will push overall AR spending well ahead of VR spending by the end of the forecast.
On a geographic basis, the United States will deliver the largest AR/VR spending total in 2019 ($6.6 billion), followed by China ($6.0 billion). Japan ($1.76 billion) and Western Europe ($1.74 billion) will be the next two largest regions in 2019, but Western Europe will move into the third position in 2020. The countries that will see the fastest growth in AR/VR spending over the forecast period are Canada (83.7% CAGR), the United States (77.1% CAGR) and China (76.2% CAGR). By the end of the forecast period, Canada is expected to become the fourth largest region for overall AR/VR spending.