IDC Spending Guide Forecasts Strong Growth for Augmented and Virtual Reality
FRAMINGHAM, Mass., Nov. 30, 2022 -- Worldwide spending on augmented reality and virtual reality (AR/VR) is forecast to reach $13.8 billion this year and grow to $50.9 billion in 2026, according to the International Data Corporation (IDC) Worldwide Augmented and Virtual Reality Spending Guide. The five-year compound annual growth rate (CAGR) for AR/VR spending will be 32.3%. Virtual reality will account for more than 70% of all AR/VR spending throughout the 2022-2026 forecast while overall spending will be almost evenly split between consumer and commercial applications.
"The AR/VR market has been taking slow but sure steps in recent years and is poised to take longer strides in the years to come," said Ramon T. Llamas, research director, Mobile Devices and AR/VR at IDC. "Recently announced and upcoming hardware from major brands showcase clear improvement from first-generation devices. The deeper proliferation into current use cases and the addition of new ones highlight the versatility that AR/VR brings. And along with these is a whole host of services to help make them happen. The result: a maturing market ready to thrive for consumers and commercial users alike."
The named commercial use cases that are forecast to receive the largest AR investments throughout the forecast are industrial maintenance and training. Together, these two use cases will account for almost one third of all AR-related spending. In VR technology investments, the two largest named commercial use cases are found in training and collaboration, capturing nearly 44% of the market by 2026.
In comparison, the two leading consumer use cases – virtual reality gaming and augmented reality gaming – will grow to about 25% of all AR/VR spending by the end of the forecast.
The use cases that will see the fastest spending growth over the forecast period are emergency response (82.9% CAGR), augmented reality games (57.8% CAGR), internal videography (47.8% CAGR), and collaboration (42.7% CAGR). Sixteen other use cases are forecast to have five-year CAGRs of 30% or more.
"IDC introduced 34 additional commercial use cases to the Worldwide AR/VR Spending Guide in 2022, including minimally integrated, highly mobile, and remote use cases as well as emerging virtual collaboration." said Marcus Torchia, research vice president, Data & Analytics. "Enterprises deploy investments in AR and VR in a variety of ways including headset-centric and personal device-centric approaches as well as on premise and via cloud services supported implementations. This flexibility is allowing enterprises to realize positive returns and short payback periods on their investments."
While commercial spending will trail consumer spending overall, a number of industries are expected to make strong investments in AR/VR applications over the next five years. The largest investments will come from discrete manufacturing, healthcare providers, professional services, education, and retail. The industries that will deliver the strongest spending growth over the forecast period will be healthcare, telecommunications, state/local government, and utilities.
From a technology perspective, standalone and tethered head-mounted displays (HMDs) will account for more than one third of all AV/VR spending throughout the forecast, followed by software, which will grow to more than a quarter of all spending by the end of the forecast. Host devices and tethered HMDs will see the fastest spending growth with five-year CAGRs of 59.5% and 57.9%, respectively. Software will also experience strong growth with a CAGR of 41.3%.
On a geographic basis, the United States will deliver the largest AR/VR spending totals, accounting for more than one third of the market throughout the forecast. China will be the second largest region, growing to nearly a quarter of the overall market in 2026 with a five-year CAGR of 42.2%.
The IDC Worldwide Augmented and Virtual Reality Spending Guide (V2 2022) examines the augmented reality (AR) and virtual reality (VR) opportunity from the use case, technology, industry, and geography perspectives. Spending data is available for nine regions, 20 industries, 80 use cases, and 12 technology categories. The data provides valuable insights into this rapidly growing market and how the market will develop over the next five years.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company.