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Even With The Potential To Reach A CAGR Of 77%, The Industry Expects More From The AR/VR Market In 2020

Global AR VR Market

In the era of immersive computing, the augmented and virtual reality market has been on a full swing for the last five years. After rapid development in 2016-17, the global AR/VR market has been on a spree of penetrating every industry, with investors starting to shift their focus to using this technology to commercial applications.

With the industry becoming more ambitious, newer AR/VR technologies are evolving to make an effective contribution to some of the most flourishing segments such as healthcare, gaming, military and retail. The emergence of these immersive technologies made it easier for users to interact with objects in a virtual environment, very similar to those in the real world.


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Digitisation has been a key growth factor for driving the virtual and augmented reality market, however, the advancement of technologies, increasing demand in gaming and entertainment industries, the rising investment in VR market and the availability of affordable VR devices, have also played a major role in steering the market towards growth.

The worldwide spending on AR/VR market is set to hit approximately $18.8 billion in 2020, which will be an increase of 78.5% over the $10.5 billion, that is expected to be spent in 2019. It also states that spending on AR/VR products and services across the globe will continue to grow throughout the 2019-2023 forecast period, achieving a five-year CAGR of 77%.

With AR/VR penetrating numerous industries, experts believe that by the coming year the largest segment of AR/ VR applications will be in the gaming industry. The revenues of the video gaming segment are expected to rise to $7 billion by the coming year and could reach up to $11.5 billion by 2025. Apart from the gaming industry, the healthcare and the engineering segment are also expected to witness a big push in the coming years, with more possibility for commercial and industrial applications.

Although augmented reality (AR) has always been termed together with virtual reality (VR), the market tends to differ a bit due to its application. With AR one can enhance an already existing environment rather than immersing oneself in a new virtual one. However, the AR market is also forecasted to rise with the revenues projected to reach around $200 billion by 2015.

Also Read: How Anyone Can Become AR/VR Developer

Industry Players

On the other hand, the market for VR is crowded with tech giants like Sony, Facebook (Oculus), and Microsoft who are continuously enhancing their products and platforms with VR technologies. The huge success of PlayStation VR Product has created a leader in the VR headset market — Sony, accounting for around 37% of total shipments. Microsoft, as well, has invested heavily in this technology by owning over 10 thousand AR/VR patents. Other underrated major players in the VR device market are Intel and HTC, accounting for a relatively significant market share.

Alongside the hardware sector of the VR market, which includes VR devices like headsets, the industry also envelops a thriving software market which is estimated to reach a value of around $24.5 billion by the coming year. Developers from all varied industries are seeing immense possibilities in this market and are strategising a way to incorporate the technology into their businesses.

The global VR software market also holds some of the big names like Google, Microsoft, UK- based Blippar, Pixologic, German-based Metaio Gmbh, Qualcomm, Oculus VR, LLC, WorldViz, Sweden-based Starbreeze Studios and BAE Systems AB, Singapore-based Razer Inc., and Taiwan-based HTC.

Giulia Carosella, a research analyst at IDC, believes that the commercial market of AR/VR is going to see a continuous expansion as the deployment costs declines and full deployment becomes tangible. “Focus is shifting from talking about the benefits of the technology to implementing real and measurable business outcomes, including productivity and efficiency gains, knowledge transfer, employee’s safety, and more engaging customer experiences,” said Carosella.

The report also suggests that the commercial use cases of AR/VR will account for nearly half of the spending in 2020, led by training, which will account for $2.6 billion, and industrial maintenance ($914 million) use cases, and the public use cases will make up a little over one third. The two major areas, customers are willing to spend are VR games ($3.3 billion) and VR feature viewing ($1.4 billion).

Also Read: How XROM Pushing AR/VR Industry To Thrive In India


The global VR market is vastly segmented based on components like type, deployment, application and region. Furthermore, each component is subdivided as follows:

By Type:

  1. 3D Modelling Software
  • AutoCAD
  • ZBrush
  • 3DS Max
  • Blender

2. 360 Degree Custom VR Software

3. Real-time simulation 

By Deployment:

  1. On-Premise
  2. Cloud

By Application:

  1. Aerospace & Defense
  2. Gaming & Entertainment
  3. Diagnostics & Surgeries
  4. Tourism
  5. Others

By Region:

  1. North America
  2. Europe
  3. Asia pacific
  4. Rest of the world

Target Audience:

  1. Software Developers
  2. Testing
  3. Military personnel
  4. Hospitals
  5. Entertainment

The market for VR software is led by North America, which is then followed by secondly Europe and thirdly the Asia Pacific. 

According to Marcus Torchia, research director at Customer Insights & Analysis the whole enterprise industry will be seeing more of standalone viewers play out in use case adoption. “However, the enterprise will drive much of these high-end headset adoption trends and the consumer segment will be seeing more adoption in gaming and entertainment aspect.”

Experts also believe that, out of the two technologies, the spending on VR solutions will any day be greater than that for AR solutions. But in future, the increase in AR hardware, software, and services spending, which will have a 164.9% CAGR will push the overall AR spending way ahead of the game.

On a geographic basis, it is estimated that China will deliver the largest AR/VR spending in 2020, with $5.8 billion, followed by the US, which will account for $5.1 billion. Following China and the US, there are other large regions in this game like Western Europe, which will be approximately $3.3 billion and Japan with $1.8 billion. A few also believe that the spending of Western Europe will end up moving ahead of China by 2023.

Also Read: A Day In The Life Of A Self-Made AR/VR Entrepreneur


Although it’s not all gloomy, with the current figures in hand, we can say that the AR/VR market hasn’t yet reached full potential. There is no reference or evidence of this innovative immersive technology to go mainstream, however, the numbers definitely show a huge revolution in the industry. Several businesses are at the forefront of experimenting with AR/ VR services and technologies in order to keep pace with the growing customer interest.

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Sejuti Das
Sejuti currently works as Associate Editor at Analytics India Magazine (AIM). Reach out at

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