European spending on augmented reality (AR) and virtual reality (VR) is projected to reach $4.8 billion in 2024, IDC said.
This spending is expected to grow at a CAGR of 21.9 percent over the next five years, reaching $10.2 billion by 2028. The stronger-than-expected growth is driven by increased VR spending following the introduction of new devices in the European market.
“European organizations recognize the importance of AR/VR technologies in their digital transformation journey. The technical progress has been accelerating, but a widening skills gap creates bottlenecks in the transformation,” said Barbora Pavlikova, a research analyst with IDC Data and Analytics, Europe.
“Given the current ageing population and low supply of talent and employees’ lack of necessary new skills, AR/VR offers a great opportunity for organizations to bridge the skills gap by increasing their upskilling and reskilling initiatives via efficient immersive training.”
In the AR market, discrete manufacturing will be the highest-spending industry sector. AR technology helps optimize processes across the value chain, allowing real-time visualization and streamlining of complex concepts, thus providing valuable operational insights.
The healthcare sector is projected to experience the fastest medium-term growth in AR spending, with a five-year CAGR of 22.7 percent. European healthcare organizations continue to prioritize investments in innovation, such as interconnected workspaces and the expansion of virtual care and telehealth services.
Reflecting AR’s popularity in manufacturing, augmented maintenance is the largest use case in terms of investments, while training is forecasted to post the highest CAGR by 2028. As digital transformation continues to shape new job roles and skillsets, training becomes a crucial tool.
On the VR side, the retail industry will remain the largest sector in terms of spending, accounting for 17.8 percent of total B2B VR spending. The revolution in online retail showcasing has enhanced customer shopping experiences and accelerated VR investments.
The banking sector is expected to record the fastest growth in VR spending over the five-year forecast period.
Recent launches of devices like the Apple Vision Pro, Meta Quest 3, and Bigscreen Beyond are expected to further boost VR spending, with all industries forecasted to post double-digit five-year CAGRs.
Training will remain the largest use case for VR, as immersive training proves effective in improving employees’ learning curves.
VR offers businesses significant opportunities to provide training for new hires and to enhance upskilling and reskilling initiatives. Collaboration is set to be the fastest-growing use case, driven by the shift towards more flexible work models and new ways of working, necessitating increased investments in collaborative employee experiences, according to the Worldwide Augmented and Virtual Reality Spending Guide published by International Data Corporation (IDC).
