The recent release of the IDC Worldwide Augmented and Virtual Reality Spending Guide forecasts Asia Pacific (excluding Japan) spending on augmented reality and virtual reality (AR/VR) to grow rapidly at a compound annual growth rate (CAGR) of 47.7% (2019-2024) and reach $28.8 billion by 2024.
This growth is primarily driven by the AR/VR technology capabilities addressing the issues of different industries in the current COVID-19 scenario and creating immense opportunities throughout the forecast.
“The restrictions imposed due to the pandemic urged many organizations to rely on technologies to support their business processes/functions such as customer service, remote health and minimized in-person meetings among others. With this, there was strong new demand across many industries for AR/VR technology in the market — especially in the second half of 2020,” said Ritika Srivastava, Associate Market Analyst at IDC Asia Pacific.
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The commercial segment surpassed consumer AR/VR spending last year and will continue to account for a larger share of the spending. However, consumer spending is also forecasted to grow significantly with a CAGR of 43.2% between 2019 and 2024. The industry that is leading the most projects/implementation in Asia Pacific (excluding Japan) is Education, with online virtual teaching turning out to be a more engaging experience for students. It is then closely followed by Retail, and Discrete Manufacturing – the three industries encompass close to 50% of the overall commercial sector in 2020.
There are numerous diverse industries that have significant ability to grow at a quicker rate over the forecast period (2019-2024) with some of the new use cases in the works. Banking (313.7% CAGR) followed by Federal/Central Government, Healthcare Provider, and Securities and Investment Services are the industries that are picking up momentum to delve into the new use cases and are profitable in terms of ROI optimization. Use-cases that participated in practical tasks with the support of the Augmented Reality for executing tasks like training have an abundance of impulse within the industries.
Virtual reality games are a leading use case in 2020, with more than one-third of the overall AR/VR technology market being one of the top entertainment sources in 2020 – owing to the limitations of physical interaction due to pandemic. This is followed by training, and video/feature viewing (VR) use cases. However, emergency response and internal videography are the fastest-growing use cases in terms of compound annual growth rate over the forecast (2019-2024).
From a technology standpoint, hardware including host devices and viewers will contribute to almost two-thirds of overall AR/VR spending by 2024 – dipping in share as software and services gain momentum. Services spending will see strong growth across the forecasted period (CAGR 62.4%) for systems integration, followed by custom application development and consulting services, while software spending will have a CAGR of 63.8%.
From the two reality types of perspective, spending on VR solutions will be greater than that of AR solutions initially. Though, strong growth in AR hardware, software, and services spending (118.0% CAGR) will push overall AR spending well ahead of VR spending by the end of the forecast period 2019- 2024.
Digital transformation efforts
During the pandemic, AR/VR showed great potential and played a critical role in the digital transformation (DX) efforts of many organizations across industries. Doctors using mixed reality to solve several problems during the on-going pandemic were among the focus areas of investments in AR/VR technology. In addition, remote working, virtual events, and more augmented customer engagement use cases will bring demand for implementing AR/VR technology in the future.
As organizations plan their return to workplace strategies, ensuring a safe workplace for employees will be a top of agenda item for business leaders, and creating a contactless/touchless workplace environment will be crucial. AR/VR will be a key enabler in creating a workplace that can minimize person-to-person interaction, with initiatives such as virtual conferences, enable remote support and device management, AR aided retail shopping, etc.
On a geographic basis, China market will represent the largest AR/VR spending in the Asia Pacific (excluding Japan) region — with more than 90% share in 2020, and spending is projected to take off at a five-year CAGR of 47.1% over the forecast period (2019-2024). Furthermore, AR/VR technology in ASEAN countries has started gaining prominence and has partnered with AR/VR enterprises to improve the industry experience.