Augmented and virtual reality industry about to explode into life

17 Aug 2016

The industries of augmented reality (AR) and virtual reality (VR) could reach a combined value of $162bn in just three-and-a-half years, with software and hardware representing each half of the total figure.

A compound annual growth rate of 181.3pc is expected across AR and VR between 2015 and 2020, according to a new report from IDC.

With the initial hardware expected to represent around $80bn of the total market value come 2020, the same amount will be generated in additional software services to bring the total to around $162bn.

This will initially be driven by VR systems, with viewers, software, consulting services and systems integration services set to dominate 2016 and 2017, before AR takes the lead.

Pokémon no?

This is somewhat surprising given the easier lead-in for AR, Pokémon Go being a prime, profitable example.

After 2017, IDC thinks AR will really get into the groove, hitting critical mass in healthcare delivery and product design and management-related use cases.

“The rise of new, less-expensive hardware will put virtual and augmented reality technology within the grasp of a growing number of companies and individuals,” said Tom Mainelli, vice president of the devices and AR/VR section at IDC.

“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.”

US leading the way

IDC expects the US, western Europe and the Asia-Pacific region (minus Japan) to represent 75pc of global revenues.

The three regions will generate comparable revenue amounts in 2016, but the US should pull well ahead by 2020.

“For many years, augmented and virtual reality were the stuff of science fiction,” said Chris Chute, vice president of customer insights and analysis at IDC.

“Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user-generated content-driven experiences.”

Main virtual reality image via Shutterstock

Gordon Hunt was a journalist with Silicon Republic