VR/AR to reach $162 billion in worldwide revenues by 2020 - IDC

International Data Corporation (IDC) has issued a new report on the burgeoning field of augmented and virtual reality and it's interesting to see just how huge the research firm anticipates the market to become. IDC forecasts that global revenues for AR/VR will grow from $5.2 billion in 2016 to more than $162 billion in 2020, representing a compound annual growth rate of 181.3% during that time. While software revenues should grow more than 200% year-over-year in 2016, IDC noted that hardware will actually generate half of all revenues during the forecast period.

Additionally, while revenues for VR systems and software are expected to be greater than AR-related revenues this year and next, "largely due to consumer uptake of games and paid content," AR should surge ahead after 2017, IDC said. AR will become especially important in non-gaming fields, "hitting critical mass in healthcare delivery and product design and management-related use cases."

"Our model includes host devices, which is basically PCs bought alongside VR HMDs like Rift and Vive to power business experiences and use cases. It doesn't include consumer PC purchases, PS4 purchases, for PS VR, etc," IDC gaming research director Lewis Ward explained to GamesIndustry.biz.

"It also includes SI and related consulting work at the enterprise level. So businesses are starting to use Hololens and VR tech internally and they want to link it to internal data sources or consult with a 3rd party provider on how to approach AR/VR properly, and that type of cost is also included in the model as part of total AR/VR industry revenue. Gaming and 360 degree videos get a lot of press but a significant portion of the use cases and expenditures this year are happening at the enterprise level."

"The rise of new, less expensive hardware will put virtual and augmented reality technology within the grasp of a growing numbers of companies and individuals," added Tom Mainelli, vice president, Devices & AR/VR. "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."

Looking at a regional breakdown of AR/VR markets, IDC also said that the US is expected to lead the category by 2020. Along with the US, Asia/Pacific (excluding Japan) and Western Europe will account for three quarters of worldwide AR/VR revenues, and all three areas should see annual growth of more than 100% throughout the forecast period.