AR/VR Market to Grow to $162 Billion in 2020

Research firm IDC is predicting 181% annual growth for the market as hardware becomes less expensive.
Matthew HellerAugust 16, 2016

A new report from International Data Corp. suggests the current craze over Pokémon Go may be only a taste of things to come.

The research firm is predicting that worldwide revenues for the augmented reality and virtual reality (AR/VR) market will grow from $5.2 billion in 2016 to more than $162 billion in 2020, representing a compound annual growth rate of 181.3%.

“For many years augmented and virtual reality were the stuff of science fiction,” Chris Chute, vice president of Customer Insights and Analysis at IDC, said in a news release. “Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences.”

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Pokémon Go, an augmented reality mobile game, has generated more than $250 million in revenue since its release last month, and is expected to surpass $1 billion by the end of the year.

According to IDC, AR/VR hardware will account for more than 50% of worldwide revenues for the segment over the next four years. Software revenues will grow more than 200% year over year in 2016, IDC said, but will quickly be overtaken by services revenues in the middle years of the forecast, as logistics and manufacturing demand enterprise-class support.

“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,” said Tom Mainelli, IDC’s vice president for Devices & AR/VR.

Revenues for VR systems, including viewers, software, consulting services and systems integration services, are forecast to be greater than AR-related revenues in 2016 and 2017, largely due to consumer demand for games and paid content. After 2017, IDC expects AR revenues to surge ahead, hitting critical mass in healthcare delivery, product design and management-related uses.

“Because AR/VR technology is still in the early stages of adoption, every region [of the world] is expected to see annual growth of more than 100% throughout the forecast period,” IDC said.