The latest forecast on Augmented Reality (AR) and Virtual Reality (VR) spending from market intelligence provider International Data Corporation (IDC) highlights an overall increase in spending for all immersive technology combined.

It paints a positive outlook for AR adoption, while it shows VR adoption will continue to lag. In the coming 12 months, both consumer and business sectors will adopt AR instead of VR. 2020 will see the business sector fully deploy AR and consumers employ AR through their smartphones.

This year, China will become the largest market for immersive technology.  The U.S, Western Europe, and Japan will follow behind, respectively.

Spending on AR and VR will increase by 79% to $18.8 billion worldwide in the next 12 months. The retail industry leads to creating new apps for immersive technologies. Retailers will spend $1.5 billion on AR and VR in 2020 as they look to enhance customer experience (CX); International Data Corp. (IDC) forecasts in a new report.

In the next 12 months, consumer spending on AR and VR will hit $7 billion, and consumers will spend $3.3 billion on VR gaming and $1.4 billion on accessories because of VR headsets affordability.

In 2020, 37% of AR and VR revenue will come from the consumer market; 23% from distribution and services; 19% from manufacturing and resources; 14% from the public sector. China, this year, will become the largest market for immersive technology. The China market expects to spend $5.8 billion on AR/VR; the U.S $5 billion, Western Europe $3 billion, and Japan $2 billion according to IDC.

Key Findings

The IDC’s forecast notes that spending on immersive technology will not slow down over the next 12 months. However, some leading trends will arise due to consumers and industry finding ways to embrace promising innovations. AR and VR will grant enhanced CX. Consequently, these technologies will increase the effectiveness of product demos for cosmetics, fashion, auto, and home furnishings.

IDC shows that the commercial markets will reach full deployment and lead spending on AR and VR. Lower costs and enhanced benefits of adoption will drive this spending in 2020. Companies across industries expect to measure increases in productivity, effectiveness, shared knowledge, employee protection, and compelling CX using VR and AR.

“AR/VR commercial uptake will continue to expand as the cost of entry declines and benefits from full deployment become more tangible. Focus is shifting from talking about technology benefits to showing real and measurable business outcomes, including productivity and efficiency gains, knowledge transfer, employee’s safety, and more engaging customer experiences,” said Giulia Carosella, research analyst, European Industry Solutions, Customer Insights & Analysis. 

Smartphones have bolstered mass adoption of AR, while VR lags due to needing expensive hardware to enjoy a VR experience using a PC. IDC is reporting that companies within Tech are developing specialized AR hardware that could take the place of smartphones. In the next year, IDC says that spending on hardware, software, and services for AR, will begin to exceed VR spending. The mass market will adopt AR before adopting VR.

“Across enterprise industries, we are seeing a strong outlook for standalone viewers play out in use case adoption. Enterprises will drive much of these high-end headset adoption trends. In the consumer segment, more affordable viewer models for gaming and entertainment purposes will see the broadest industry adoption,” said Marcus Torchia research director, Customer Insights & Analysis 

To conclude, the 12-month IDC forecast for immersive technology shows optimism for both AR and VR. While VR adoption will lag behind the adoption of AR, its market share will continue to grow. Development of VR technology will also continue to expand. VR market share and development will not grow at the speed of AR.