Analyst firm IDC predicted that spending on augmented reality and virtual reality (AR / VR) will reach $17.8 billion (+95 percent) in 2018 from $9.1 billion this year.
Spending on AR / VR products and services will grow at a similar rate throughout the remainder of the 2017-2021 forecast period, achieving a five-year compound annual growth rate (CAGR) of 98.8 percent.
Virtual reality will drive greater levels of spending in the next 12-18 months, as both consumer and commercial use cases gain traction.
“Companies see potential in the technology, from product design to retail sales to employee training,” said Tom Mainelli, program vice president, Devices and AR/VR at IDC.
The AR market will deliver more modest levels of spending near term. Mobile AR on smartphones and tablets is likely to garner the most attention from consumers, while head-mounted displays will primarily sell into commercial use cases.
The consumer sector spending for AR/VR products and services will reach $6.8 billion. Nearly three quarters of this total will be for VR hardware and software while AR spending will be dominated by software purchases.
Gaming will be the dominant AR/VR use case for consumers. The five-year CAGR for consumer AR/VR spending will be 45.2 percent with total spending exceeding $20 billion in 2021.
The commercial sectors will represent more than 60 percent of AR/VR spending in 2018 and grow to more than 85 percent of the worldwide total in 2021.
Each of the five commercial sectors is forecast to undergo triple-digit spending growth, led by the public sector with a five-year CAGR of 156.7 percent. The largest of the commercial sectors in 2018 will be distribution and services ($4.1 billion), led by the retail, transportation, and professional services industries.
The second largest sector will be manufacturing and resources ($3.2 billion) with balanced spending across the process manufacturing, construction, and discrete manufacturing industries. Retail will be the industry with the largest AR/VR spending in 2018. The process manufacturing and construction industries will be in the next position.
Retail showcasing and online retail showcasing will have a combined spending of more than $950 million in 2018. Online retail showcasing will also experience exceptional spending growth with a five-year CAGR of 225 percent.
IDC said onsite assembly and safety, process manufacturing training, and industrial maintenance will be the largest use cases in the manufacturing and resource sector. Infrastructure maintenance and government training will be the two largest use cases in 2018 in the public sector.