Spending on augmented reality (AR) and virtual reality (VR) in the Asia Pacific region (excluding Japan), also known as APeJ, is projected to hit $11.1 billion in 2018. This represents a significant increase of over 100% compared to the $4.6 billion spent in the previous year, according to research firm IDC.

IDC’s latest Worldwide Semiannual Augmented and Virtual Reality Spending Guide reveals that investments in AR/VR technology have gained substantial momentum in 2018. This trend is expected to continue, with the market projected to grow at a rate of 68.5% annually between 2017 and 2022.

Avinav Trigunait, Associate Research Director at IDC Asia Pacific, highlights the role of new standalone VR headsets like Oculus Go and Mirage Solo in driving this growth. These headsets eliminate the need for expensive PCs or consoles, making VR experiences more accessible and affordable.

Consumer spending is anticipated to be the primary driver of AR/VR market growth, accounting for 51.3% of total spending in 2018. The introduction of new VR headsets is expected to significantly contribute to this growth.

While consumer spending dominates, AR investments will primarily focus on services. The release of AR software development kits (SDKs) by industry giants Google and Apple is predicted to fuel spending on mobile application development and games. AR games, in particular, hold strong potential, with a projected five-year growth rate of 90.9%. VR games are also expected to experience significant growth, albeit at a comparatively lower rate of 54.7%.

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

Although enterprise spending currently constitutes 48% of the total AR/VR market, it is predicted to surpass consumer spending within the next five years. By the end of the forecast period, enterprise spending is projected to reach 58%. All five commercial sectors are expected to demonstrate consistent growth in AR/VR spending. The distribution and services sector, along with the public sector, are expected to lead this growth.

Within the distribution and services sector, which is projected to reach $2 billion in 2018, personal and consumer services, retail, and professional services industries will drive the majority of spending. The manufacturing and resources sector will follow closely behind at $1.7 billion, with balanced investment across process manufacturing, construction, and discrete manufacturing.

VR games currently represent the largest use case, accounting for 39.4% of total spending in 2018. Training and retail showcases are the dominant use cases within the distribution and services sector, with a combined spending exceeding $329 million in 2018. In the manufacturing and resource sector, training, industrial maintenance, and project management are the leading use cases. Infrastructure maintenance and government training represent the most significant applications in the public sector.

Trigunait emphasizes the increasing adoption of AR and VR across various sectors, with companies developing innovative business and IT applications. These applications range from design and visualization to corporate training, field maintenance, customer experience enhancement, and marketing.

Swati Chaturvedi, Senior Market Analyst at IDC’s IT Spending Team, highlights the rapid adoption of AR/VR technologies and their real-world applications in both the consumer and enterprise segments. While adoption in the Asia Pacific region (excluding China and Japan) may be slower compared to the US or China, the growth potential is substantial. Businesses are increasingly leveraging these technologies to accelerate their digital transformation initiatives. From 2019 onwards, the education sector is predicted to be the largest spender on AR/VR technology, followed by retail, manufacturing, and healthcare.

Geographically, China is expected to dominate AR/VR spending in the APeJ region. In 2018, China is projected to account for 91.3% of the region’s total spending, reaching $10.2 billion. This dominance is likely to continue, with China’s AR/VR market projected to grow at an annual rate of 70.5% over the next five years. Meanwhile, other APeJ countries are in the early stages of exploring and implementing AR/VR technology, particularly in retail and other relevant industries.