Worldwide spending on augmented reality and virtual reality (AR/VR) is forecast to reach US$17.8 billion in 2018, an increase of nearly 95% over the US$9.1 billion according to IDC. The analysts predicts a steady growth rate of 98.8% compound annual growth rate (CAGR) over five years from 2017-2021.
"Virtual reality will continue to drive greater levels of spending in the next 12-18 months, as both consumer and commercial use cases gain traction. There is currently a huge appetite from companies that see tremendous potential in the technology, from product design to retail sales to employee training," said Tom Mainelli, program vice president, Devices and AR/VR at IDC.
Mainelli says head-mounted displays will primarily sell into commercial use cases. Overall the commercial sectors will represent more than 60% of AR/VR spending in 2018 and grow to more than 85% of the worldwide total in 2021.
Each of the five commercial sectors is forecast to undergo triple-digit spending growth throughout the forecast, led by the public sector with a five-year CAGR of 156.7%. The largest of the commercial sectors in 2018 will be distribution and services (US$4.1 billion), led by the retail, transportation, and professional services industries. Retail will be the industry with the largest AR/VR spending in 2018, followed by the process manufacturing and construction industries.
In the distribution and services sector, retail showcasing and online retail showcasing will be the two largest use cases with combined spending of more than US$950 million in 2018. Online retail showcasing will also experience exceptional spending growth with a five-year CAGR of 225%.
“Commercial entities are ready to embrace virtual reality for both customer-facing use cases and internal ones," said Marcus Torchia, research director of IDC Customer Insights & Analysis.
"There are a lot of opportunities here to develop commercial-grade hardware and applications that meet the needs of these industries. Meanwhile, phone-based AR is likely to garner most of the excitement for the near term and many companies are already experimenting with AR apps and services. Some of these will be useful, many won't be, but over the course of the next 12–18 months, we should start to see developers beginning to grasp the potential of AR."