Spending on AR and VR Forecast to Deliver Strong Growth Through 2024
Worldwide spending on augmented reality and virtual reality (AR/VR) is forecast to accelerate out of the pandemic, growing from just over $12.0 billion this year to $72.8 billion in 2024, according to IDC. The five-year compound annual growth rate (CAGR) for AR/VR spending will be 54.0%. "2020 has become a major turning point where enterprises and organizations across all verticals are embracing the unarticulated need for augmented, mixed, and virtual reality," said Stacey Soohoo, research manager, Customer Insights & Analysis at IDC.
“Although disruptions caused by the pandemic have interrupted businesses' supply chains and forced businesses and consumers to take a cautious approach to spending, many enterprises are realizing a different set of ingredients are needed to succeed. Training continues to be a leading use case for AR/VR adoption. Managing face-to-face interactions and touch points in and out of the physical workplace are just as essential; ranging from virtual property tours to retail showcasing, organizations are adopting AR/VR to create a personalized, immersive customer experience. Many enterprises are making necessary investments to address needs that outlive ones brought on by the pandemic, and for many, the adoption of AR/VR is just the tip of the iceberg."
The commercial use cases that are forecast to receive the largest investments in 2024 are training ($4.1 billion), industrial maintenance ($4.1 billion), and retail showcasing ($2.7 billion). The use cases that will see the fastest spending growth over the forecast period are internal videography and logistics and package delivery management with CAGRs of 101.0% and 100.5% respectively. Seven other use cases are forecast to have five-year CAGRs of 90% or more.
While commercial spending will continue to trail consumer spending for the total AR/VR market, much of the growth in AR/VR spending will be driven by investments from the commercial and public sectors. The strongest spending growth over the forecast period will come from the banking (126.7% CAGR) and securities and investment services (106.1% CAGR) industries, followed closely by federal/central government (102.5% CAGR).
Consumer spending is expected to see a 34.1% CAGR over the five-year forecast period. Retail will deliver the largest commercial investment at $7.3 billion in 2024, while discrete and process manufacturing will see spending levels of $5.9 billion and $5.1 billion, respectively. From a technology perspective, host devices and viewers will account for around two thirds of all AR/VR spending by 2024, declining in share as software and services gain momentum.