Augmented Reality and Virtual Reality Market Overview
The global augmented reality and virtual reality market was valued at $6,158.5 million in 2017 and is forecasted to witness a CAGR of 58.1% during the forecast period. Soaring smartphone penetration, and advancement in internet connectivity and computing are the major factors driving the growth of the market.
GLOBAL AUGMENTED REALITY AND VIRTUAL REALITY MARKET, BY COMPONENT, $M (2013 - 2023)
On the basis of device type, the augmented and virtual reality market is categorized into AR devices and VR devices. Of the two, VR devices contributed larger revenue to the market, amounting to more than 60% in 2017. On the contrary, AR devices is predicted to be the faster growing category in the augmented reality and virtual reality market, owing to the rise in demand from retail and healthcare sectors; for instance, AccuVein Inc., a U.S. based medical imaging solutions provider is making AR devices that help doctors and nurses to identify the location of veins in patients’ bodies.
Augmented reality devices are classified into head mount display (HMD) and head up display (HUD); where the HMD type AR devices contributed more than 65% sales in 2017 and is also expected to continue being the largest revenue generator in the market during the forecast period, owing to the advancements in the category. For instance, in the automotive sector, the HMD type AR devices can overcome technological limitations of existing automotive HUD, such as the limited field of view and the restrictive boundaries of the windshield.
Virtual Reality devices are classified into HMD, gesture control devices, and projection-based devices. Of these, HMD was the largest revenue contributor in 2017, accounting for nearly 74% share in the VR market in 2017.
On the basis of component, the augmented reality and virtual reality market is categorized into hardware and software. The hardware component was the largest contributor to the market, accounting for more than 65% of revenue share in 2017. On the other hand, the software component category is projected to witness higher growth during the forecast period, owing to the need to provide consumers with compelling media and entertainment content such as AR-based simulation games.
On the basis of applications, the augmented reality and virtual reality market is categorized into commercial, consumer, aerospace and defense, healthcare, enterprise, and ‘others’.
Advancements in AR and VR devices which has improvised the visual experience of users led to surge in the adoption of augmented reality and virtual reality for consumer applications in 2017. It is also predicted to be the largest revenue contributor to the augmented reality and virtual reality market during the forecast period.
Furthermore, augmented reality and virtual reality is gaining traction for commercial applications. For instance, Wayfair Inc., an American ecommerce company allows its customers to visualize furniture in their home before purchase with through smartphones. Similarly, the blend of AR technology with VR technology has offered an opportunity to redefine the conventional museum experience and boundaries of art and heritage presentations.
During the forecast period, the augmented reality and virtual reality market is expected witness the fastest growth in APAC. Though APAC is still an emerging market for VR and AR products, but the presence of big players in the region’s market such as Samsung Electronics, Sony Corporation, and HTC Corporation is expected to push the growth of the Augmented reality and virtual reality in the region. Also, China is one of the biggest importers and exporters of goods and services in the world, therefore a growing demand for VR and AR solutions for logistics and warehousing is expected from the country in the coming years.
Augmented Reality and Virtual Reality Market Dynamics
Some of the key trends observed in augmented reality and virtual reality market include launch of augmented reality and virtual reality-based devices, mobile apps, and gaming consoles by tech giants such as Google and Sony Corporation.
Augmented reality and virtual reality devices such as smart glasses, HUDs, and HMDs offer a high degree of flexibility and mobility. Moreover, these devices are hefty in terms of computing capabilities and can be used for countless general applications such as smartphones or tablet PCs. Furthermore, companies operating in this market are focusing largely on the aesthetics of these devices in order to make them stylish and fashionable, which is expected to increase its adoption by consumers. The versatility and uncomplicated use of these devices is one of the significant factors responsible for their large-scale popularity and use.
Surge in smartphone and gaming console penetration globally has driven the augmented reality and virtual reality market. One of the main reasons that the VR and AR products are gaining popularity is because they complement the features of smartphones. Smartphones carry almost similar components of a typical AR or VR devices, but with few add-ons, they can be easily used to power AR or VR headsets. Additionally, smartphones can also be used as input devices for controlling the VR environment, especially for gaming applications.
The companies engaged in the manufacturing of AR / VR devices are also distributing software development kits for creating apps based on smartphones. There are companies which are providing commercial solutions for interior designing, architecture, education, furnishing, and e-commerce using mobile and tablet-based AR / VR devices and technologies. Samsung Gear VR and HTC Vive are some of the examples of smartphone powered VR devices. Hence, the increasing penetration of smartphones and tablet computers are leading to the growth of the augmented reality and virtual reality market.
The profound benefits of AR and VR technologies also come with some serious threats to the physical and emotional wellbeing of the end-users. A certain percentage of users have experienced anxiety and stress after using VR headsets. Other negative health issues reported by the consumers are nausea, motion sickness, and severe eyestrain as these headsets are attached to the eyes for a prolonged period.
Fully immersed VR headsets disconnect the users from the real environment completely, creating physical dangers. Additionally, the focused eye on the head set’s screen can cause retinal radiation which may be a potential cause for eye cancer and a thorough research is being conducted to determine the cause for this. These health concerns if not addressed properly, can act as an inhibitor and affect the adoption rate of virtual reality or augmented reality technologies. Thus, health concerns are restraining the growth of the global augmented reality and virtual reality market.
Formation of mixed reality (MR) from integration of AR and VR offers immense growth opportunities to players in augmented reality and virtual reality market. Mixed reality will be providing diversified opportunities for VR and AR manufacturers and content developers like interactive product content management by using 3D model of objects placed virtually in the real environment for users and then can develop according to their preferences.
Simulation-based learning allows interactive experiential learning under real environment. It offers connected enterprise solutions for completing a task where different team members can be networked in a shared virtual world, regardless of the physical distance in real world. Mixed reality is considered as the future of AR and VR technologies, allowing the manufacturers and content developers to expand to different domains which were earlier not possible with the use of any of these technologies individually.
Augmented Reality and Virtual Reality Market Competitive Landscape
The global augmented reality and virtual reality market is attracting huge investments from technology giants; for example, Microsoft developed Sci-Fi reality rooms for employees; and Google launched Daydream, mobile VR content platform and also developed ARCore which is an AR development platform. Samsung, in collaboration with Oculus VR, has produced virtual reality device such as Gear VR.
Some of the key players in the augmented reality and virtual reality market are Samsung Electronics Corporation Limited, Qualcomm Technologies Inc., Intel Corporation, Microsoft Corporation, Himax Technologies Inc., Seiko Epson Corporation, Sony Corporation, Google LLC, PTC Inc. and Vuzix Corporation.