The International Data Corporation (IDC) has released a new report estimating worldwide revenues for virtual reality and augmented reality (VR/AR) will grow from $5.2 billion today to more than $162 billion in 2020.

A compound annual growth rate (CAGR) of 181.3 percent over the 2015-2020 forecast period.

VR Market Estimated 20 billion by 2020

(IDC Report VR/AR Marketing. August 2016)

IDC’s report follows the Goldman Sachs study that predicted the VR/AR market will reach $182 billion in revenue, including hardware and software/content, by 2025 and bypass television.

“For many years augmented and virtual reality were the stuff of science fiction. Now with powerful smartphones powering inexpensive VR headsets, the consumer market is primed for new paid and user generated content-driven experiences. We have already seen advancements in health. Over the next five years, we expect to see that promise become realised in other fields like education, logistics, and manufacturing,”

“The rise of new, less expensive hardware will put virtual and augmented reality technology within the grasp of growing numbers of companies and individuals. But, as always, what people can do with that hardware will depend upon the applications and services that power it. In the coming years, we expect developers to create a broad range of new experiences for these devices that will fundamentally change the way many of us do work.” Chris Chute, vice president, Customer Insights and Analysis.

VR and AR Market Summary

  • Hardware will generate more than 50% of revenues
  • AR/VR software revenues will accelerate early on, with 200% year-on-year growth over 2016 and 2017
  • The first major VR HMDs from Oculus, HTC, and Sony ship over 2 million units in 2016 combined with 50 million screenless viewers from Samsung, Google, and other vendors, driving increasing demand for VR content
  • Revenues for VR systems, software, consulting, viewer services and systems integration services, are forecast to be greater than AR-related revenues early on while AR will catch up in 2017
  • IDC sees the Asia-Pacific (excluding Japan), the U.S. and Western Europe accounting for 75% of worldwide revenues

IDC noted that the pairing of high-powered smartphones with headsets is poised to drive the market forward to the masses.