The augmented reality (AR) and virtual reality (VR) market is expected to witness a strong CAGR, of 42.9%, during the forecast period (2020–2030), owing to the soaring focus of vendors on price reduction, growing penetration of tablet computers and smartphones, and surging adoption of AR and VR technologies in the healthcare, gaming, tourism, education, and entertainment industries. According to P&S Intelligence, the market was valued at $37.0 billion in 2019 and it is projected to reach $1,274.4 billion by 2030.
The rising focus of vendors on price reduction is one of the key contributors to the market growth, owing to the surging technological advancements in hardware and software. Constant technological innovations in the field of optics will result in the development of flexible, compact, and cost-effective displays for smart glasses and headsets. In recent years, market players have been providing software development kits (SDKs) to application developers at reasonable costs.
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In addition, the increasing adoption of AR and VR technologies among enterprises will also catalyze the AR and VR market growth, worldwide. Business organizations are the key targets of leading app developers, device manufacturers, and solution providers because they adopt a wide range of applications. Moreover, most of the Fortune 500 companies are now experimenting with AR and VR technologies and some of them have already started their pilot projects. For instance, The Boeing Company decreased its wiring production time by 25% and reduced the error rate by deploying smart glass displays.
The type segment of the AR and VR market is bifurcated into AR and VR. Of these, the AR category is expected to demonstrate faster growth throughout the forecast period, due to the endless benefits and possibilities provided by AR technology. This technology offers connected experience to customers when combined with consistently evolving wireless technology, which enables the incorporation of AR into connected devices and home appliances. Additionally, the ability of AR technology to combine digital information with the physical environment in real time will also facilitate the growth of the market in this category.
AR Category To Grow Faster
Globally, the North American AR and VR market generated the highest revenue in 2019. This is ascribed to the widening application base of AR and VR technologies in the e-commerce and healthcare industries, in the region. In North America, the U.S. accounts for larger share, due to the presence of leading market players in the country. For instance, AccuVein Inc., a U.S.-based medical imaging solution provider, provides AR solutions to assist medical professionals in locating veins in patients.
Whereas, the Asia-Pacific (APAC) AR and VR market is expected to register the fastest growth in the forecast years. This can be majorly credited to the rapid technological evolution in the region. Moreover, the increasing availability of the latest AR and VR devices, owing to the surging population of tech-savvy youth and escalating popularity of AR- and VR-based gaming consoles, will also support the regional market growth. For example, eyecandylab Corporation and LG Uplus Corporation launched U+AR Shopping, an AR service for online shopping portals in October 2019.
Therefore, the surging adoption of AR and VR technologies in end-use industries and the plunging costs of these technologies and AR- and VR-enabled devices will augment the market growth.
Hardware Sales To Generate Higher Revenue
A number of factors such as the mounting focus of vendors on price reduction, surging penetration of tablet computers and smartphones, and increasing adoption of advanced technologies by enterprises will drive the augmented reality (AR) and virtual reality (VR) market at a CAGR of 42.9% during the forecast period (2020–2030). According to P&S Intelligence, the market generated a revenue of $37.0 billion in 2019, and it is projected to reach $1,274.4 billion revenue by 2030.
One of the key growth drivers for the market is the surging adoption of smartphones and tablet computers across the world. Consumer electronics, such as tablets, smartphones, laptops, and gaming consoles, have become potential hardware interfaces for the associated applications. For instance, the 2018 “Measuring the Information Society Report” published by the International Telecommunication Union (ITU) states that the global average mobile subscription rate is 107.0 per 100 inhabitants. As per the report, almost every individual in the world resides within the reach of a mobile-cellular signal.
Head-Mounted Displays (HMDs) Witness Highest Demand
In recent years, the escalating investments being made by tech corporations and venture capitalists in AR and VR start-ups have become a prominent trend in the AR and VR market. With these investments, start-ups and technology providing companies are focusing on introducing new and improved AR and VR products. For example, in 2019, Coursera, Guild Education, and BetterUp, which are some of the leading EdTech companies in the U.S., received $103 million from SEEK Group, $157 million from General Catalyst, and $103 million from Lightspeed Venture Partners, respectively.
The device type segment of the AR and VR market is bifurcated into AR devices and VR devices. The AR devices category is further classified into head-mounted displays (HMDs), head-up displays (HUDs), and handheld devices. Whereas, the VR devices category is classified into HMDs, gesture-tracking devices, and projector and display walls. Under this segment, the HMDs category held the largest market share during the historical period (2014–2019), and it is expected to demonstrate significant growth during the forecast period, due to the booming demand for lightweight displays and soaring number of patented products.
Consumer Category To Hold Leading Position
Geographically, North America accounted for the largest share in the AR and VR market during the historical period, and it is projected to register notable growth throughout the forecast period. This can be credited to the increasing application of AR and VR technologies in the e-commerce and healthcare industries in the region. Of the North American nations, the U.S. emerged as the global leader due to the existence of leading market players, such as AccuVein Inc., in the country.
Whereas, the Asia-Pacific (APAC) region is expected to demonstrate the fastest growth in the AR and VR market throughout the forecast period. This will be due to the presence of a vast population of tech-savvy youth and the high popularity of AR- and VR-enabled gaming in the region. Due to these reasons, numerous leading players are focusing on introducing AR and VR devices in the region. For instance, in October 2019, LG Uplus Corporation and eyecandylab Corporation launched U+AR Shopping, an AR service for online shopping portals, in APAC.
Thus, the rising use of smartphones and tablet computers and mounting investments being made in AR and VR start-ups will support the market growth in the foreseeable future.
