24 May 2018

AR, VR show promise in APeJ

Asia Pacific excluding Japan (APeJ) spending on augmented reality and virtual reality (AR/VR) is forecast to reach US$11.1 billion in 2018, an increase of more than 100% from US$4.6 billion the previous year, says research firm IDC.

The latest update of IDC's Worldwide Semiannual Augmented and Virtual Reality Spending Guide shows investments on AR/VR products and services have gained "exceptional market momentum" in 2018 and are expected to achieve a five-year CAGR of 68.5% through the forecast period of 2017 to 2022.

“The availability of new standalone VR headsets such as Oculus Go from Facebook and Mirage Solo from Lenovo is expected to drive adoption as well as content spending in 2018 and beyond, as these headsets eradicate the need for pairing with PCs or consoles that used to drive costs higher for AR/VR experiences," said Avinav Trigunait, Associate Research Director at IDC Asia Pacific.

The consumer sector will continue to drive growth for AR/VR products and services, and accounts for 51.3% of overall spending in 2018. The growth will be primarily driven by the availability of new headsets for VR which will lead to VR consumer spending. 

AR spending will be dominated by the purchase of services – the launch of AR software development kit (SDK) platforms from both Google and Apple are also expected to drive spending on application development and games for mobile platforms. AR games in the consumer sector look  promising and are projected to hit a five-year CAGR of 90.9%, whilst VR games will register a growth of 54.7% in five-year CAGR over the forecast period. 

Source: IDC. Top use cases for AR/VR based on 2018 market share.
Source: IDC. Top use cases for AR/VR based on 2018 market share.

Enterprise spending, which represents more than 48% of AR/VR spending in 2018, is expected to overtake the consumer sector in the next five years with 58% share by the end of the forecast period. Each of the five commercial sectors is forecast to register solid growth in spending throughout the forecast period, led by the distribution and services, and public sector. Distribution and services, worth US$2 billion, will be the largest amongst the five commercial sectors in 2018, led by the personal and consumer services, retail, and professional services industries. The second-largest sector will be manufacturing and resources (US$1.7 billion) with balanced spending across the process manufacturing, construction, and discrete manufacturing industries.

The VR games use case has the highest share among all the sectors, garnering a 39.4% share of overall spending in 2018. In the distribution and services sector, training and retail showcases will be the two largest AR use cases with a combined spending of more than US$329 million in 2018. Training, industrial maintenance and project management will be the largest use cases in the manufacturing and resource sector. In the public sector, infrastructure maintenance and government training will be the two largest use cases in 2018.

"The use cases for both AR and VR are proliferating in the enterprise segment as companies across sectors are developing new IT and business applications. Many enterprises in the region have already developed solutions utilising AR and VR such as for design and visualisation, corporate training, field maintenance and customer experience, and marketing applications," added Trigunait.

"AR/VR technologies are quickly crossing the chasm with several real-world applications emerging every day in both enterprise and consumer segments. Although, the Asia Pacific excluding China and Japan adoption is slower when compared with the US or even China markets, the growth trajectory is very promising with enterprises which are utilising AR/VR technologies to accelerate their digital transformation strategies. In terms of spending, the education industry is expected to top the charts from 2019 till the end of the forecast period out of the 19 industries covered in this spending guide. Other key industries driving growth for AR/VR include retail, manufacturing and healthcare," said Swati Chaturvedi, Senior Market Analyst, IDC IT Spending Team.

On a geographic basis, China will be the region with the largest AR/VR spending with 91.3% share of the overall spending (US$10.2 billion) in APeJ in 2018 and this trend is likely to rise over the forecast period with a five-year CAGR of 70.5%. While, AR/VR technology in other countries of APeJ are slowly emerging and experimenting around how AR/VR can improve the retail and other industry experiences.