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

The occupational use of new video technologies is about to transform the way that many people perform their daily work. As an example, augmented reality is the blending of virtual reality and real life. Software developers can create video images within applications that enhance our experience in the real world.

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, according to the latest market study by International Data Corporation (IDC). This represents a compound annual growth rate (CAGR) of 181.3 percent over the 2015-2020 forecast period.

New Applications Drive Market Development

Sales of AR/VR hardware will generate more than 50 percent of worldwide revenues throughout the forecast period. AR/VR software revenues will grow more than 200 percent year over year in 2016. However, services revenues will overtake software in the middle years of the forecast, as logistics and manufacturing demand enterprise-class support.

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 uptake of games and paid content.

After 2017, commercial applications and associated AR revenues will surge ahead, reaching a critical mass in healthcare delivery, product design and management-related use cases.

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

Meanwhile, recent developments in healthcare apps demonstrated the powerful impact augmented reality headsets can have, and over the next five years IDC expects to see that promise become realized in other fields -- such as education, logistics, and manufacturing.

IDC analysts believe that the rise of less expensive hardware will put virtual and augmented reality technology within the grasp of developer ecosystems that can drive market development. As always, what people can do with that hardware will depend upon the practical software applications.

Rapidly Evolving AR/VR Market Outlook

In the coming years, according to the IDC assessment, developers will create a wide range of new experiences for these AR/VR devices that will fundamentally change the way many of us do work.

From a regional perspective, Asia-Pacific (excluding Japan), the United States, and Western Europe will account for three quarters of worldwide AR/VR revenues.

The three regions will generate comparable revenue amounts in 2016, but the United States is forecast to pull well ahead of the other two regions by 2020. Because AR/VR technology is still in the early stages of adoption, all regions will see annual growth of more than 100 percent throughout the forecast period.

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