AR/VR revenue set to hit $13.9 bn in 2017,  IDC reveals

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Worldwide revenues for the augmented reality and virtual reality (AR/VR) market are likely to reach $13.9 billion in 2017, a new update to the Worldwide Semiannual Augmented and Virtual Reality Spending Guide from the International Data Corporation (IDC) showed.

The figure represents an increase of 130.5 percent over the $6.1 billion spent in 2016.

IDC also said AR/VR spending is expected to accelerate over the next several years, achieving a compound annual growth rate (CAGR) of 198 percent over the 2015-2020 forecast period and totaling $143.3 billion in 2020.

“AR and VR headsets get most of the media attention right now, but the hardware is only as good as the software and services running on it,” said Tom Mainelli, program vice president, Devices and AR/VR.

“On the virtual reality side, producers are quickly moving beyond games to create new content mainstream audiences will embrace. And on the augmented reality side of the fence we’re seeing commercial entities begin to more seriously evaluate the technology and begin to test the waters of app development.”

Key takeaways from the report

The consumer market will be the largest AR/VR segment throughout the forecast period with worldwide spending on hardware, software, and services expected to reach $6.2 billion in 2017, an increase of 130.5 percent over 2016.

Industry spending will trail consumer spending as virtual and augmented reality applications slowly find their way into everyday use.

The industry use cases that will attract the largest investments in 2017 are retail showcasing ($461 million), product development ($267 million), and industrial maintenance ($249 million).

By 2020, online retail showcasing will join retail showcasing and produce development as one of the largest use cases with a five-year CAGR of 403 percent.

On the consumer side, AR games will experience a CAGR of 287.4%, making it one of the fastest growing AR/VR categories over the forecast period.

Spending on VR systems, including viewers, software, consulting services, and systems integration services, are forecast to be greater than AR-related spending in 2017 and 2018, largely due to consumer uptake of games and paid content.

After 2018, AR spending will surge ahead, hitting stride in healthcare delivery, product design, and management-related use cases.