Manufacturing, e-commerce and marketing, and gaming and entertainment are set to be the high-growth applications in the augmented reality (AR) and virtual reality (VR) market.
The emergence of futuristic augmented and virtual reality devices such as smart glasses, eyewear, helmets, and headphones will change the way humans look at the world in the near future. Augmented reality is one of the major and most innovative technologies in the modern era. It provides information and entertainment overlaid on the physical world. The global augmented reality market was valued at $2.39 billion in 2016 and is expected to reach $49.48 billion by 2022, at a compound annual growth rate (CAGR) of 65.65% between 2016 and 2022.
Virtual reality creates a virtual environment wherein the user can interact with objects similar to those in the real world. By using computer hardware and software, the technology offers the user a fully immersive experience. The global virtual reality market was valued at USD 2.19 billion in 2016 and is expected to reach $33.90 billion by 2022, at a CAGR of 57.84% between 2016 and 2022.
The market for AR and VR will have high-growth opportunities in industrial, e-commerce and marketing, e-learning, tourism and sightseeing, gaming, and sports and entertainment applications. The use of AR and VR in the theme parks, museums, and art galleries, and exhibitions will help generate greater awareness among the masses regarding these technologies.
Figure: Opportunities in the AR and VR Market
Source: Industry Experts, AR/VR Associations, Primary Interviews, Secondary Sources, and MarketsandMarkets Analysis
The location-based augmented reality game Pokémon Go, which was launched in 2016, has registered five Guinness World Records. The record-breaking success of Pokémon Go has proved to be a turning point for the augmented reality software market. The market for AR apps, software, and platforms is expected to grow at a CAGR of 59.56% between 2016 and 2022.
In the augmented reality market, the enterprise/industrial application is expected to witness the highest growth in the near future. With the advent of smart manufacturing, augmented reality and virtual reality technologies are likely to witness higher demand. Thus, AR and VR companies are increasingly focusing on industrial/enterprise applications as well as consumer applications.
For instance, in May 2017, Lenovo Group Ltd. (US) partnered with Wikitude GmbH (Austria) to develop a cloud-based platform to deliver industry-focused AR content. The Augmented Human Cloud platform will combine the image recognition and markerless tracking technology of Wikitude with remote video, workflow, authoring, content editing, and deep learning applications from Lenovo New Vision (LNV), the augmented reality-focused subsidiary of Lenovo.
Augmented reality is expected to witness widespread adoption with several social media applications expected to incorporate these technologies. For instance, Snapchat allowed its users to augment their appearance, voice, and environment through AR. The entry of Apple (US) into the AR/VR space with the incorporation of augmented reality into iPhones would further provide a boost to the AR/VR market.
At the recent Consumer Electronics Show (CES) 2017, there have been enormous opportunities and variations for heads-up displays using augmented reality. The head-up display with AR was one of the most popular innovations in the CES 2017. Panasonic unveiled its HUD system integrated with augmented reality at the CES2017. This HUD system can project virtual images in front of the driver’s eye line with the use of augmented reality to enhance the real-world HUD-generated imagery. The system can give real-time information to the driver and issue a warning in case of any danger.
A head-mounted display (HMD) is a display device that is placed on the head—it can be used as a helmet or as eyewear. The HMD market is expected to be worth USD 13.36 billion by 2022, growing at a CAGR of 92.74% between 2016 and 2022. One of the major driving factors for the HMD market is the growing investment by major players for the development of various HMDs. For instance, in December 2016, Osterhout Design Group (US) received Series A funding worth $58 million by the principal investor—21st Century Fox—to expand its presence in the consumer application.
The focus of the large tech companies on AR and VR will be the biggest driver and would bring in a lot of investment in this market. Augmented reality will see higher growth compared to virtual reality in the next five years. The use of augmented reality in the enterprise/industrial application will be the game changer for AR to lead this “virtual” fight.