Adoption of AR/VR in the Media & Entertainment Industry Promises Revolutionary Future

Overview

As the AR/VR technologies transform industries globally, the trend also redefines the media & entertainment vertical. These technologies are bringing consumers closer to the media content by enhancing experience and making consumers more engaged in both physical and digital worlds. They are also enhancing the connection between content creators and viewers. This trend has also been given a push with Covid-19 outbreak, leading direct interactions to reduce thereby giving way to more digital connect in both personal, professional, and entertainment arenas. Further, commercialization of 5G technology will immensely enhance the capabilities of accessing AR/VR technologies.

Strong global growth in market size, with US being the leader in the AR/VR market

Globally, it is estimated that the AR/VR market size would reach a value of ~USD766 billion by 2025, increasing at a CAGR of 73.7% from 2018 onwards. North America remains the leader geographically, with the US estimated to reach ~USD308 billion by 2025, growing at a CAGR of 78.3% in the forecast period. Europe accounts for the second largest market share, forecast to reach $168.58 billion by 2025.

As per PwC’s report “Power shifts: Altering the dynamics of the E&M industry”, virtual reality is the fastest growing segment, with revenues rising at 2020-2025 CAGR of 30.3% to reach a value of USD6.9 billion in 2025, from USD1.8 billion in 2020

Growth of Various Segments in Global Media and Entertainment Sector

Rising global demand in VR headset / head-mounted display (HMD) in media and entertainment

As per PwC, in 2020, VR headset made a decent growth of 30.7% y-o-y, although falling short of its full potential on back of Covid outbreak. Growth is being led by encouraging new game developments and improving VR technology. Consumer’s advancement towards high quality mobile headset is another indicative factor for deepening consumer engagement. However, comparatively, the weaker B2C segment of VR in 2020, let to an increased focus on the enterprise category – i.e. VR for commercial applications.

On the product mix, Mobile VR units continue to grow at a very strong pace, overtaking market share from the Standalone VR units, primarily due to increasing penetration of smartphones.

Global Growth of Global VR headset Categories

As per Grandview Research, within the VR segment, Head-Mounted Display (HMD) devices constituted over 60% of the overall revenue share in 2020. The dominant market share of HMD is attributed to its usage in the media & entertainment domain, besides its wide application in educational and training purposes across sectors. This is followed by Gesture-Tracking Device (GTD) with ~20% share, and remaining by Projectors & Display Wall (PDW)

Prevalent trends in the AR/VR tech in M&E segment

Increasing affordability of AR/VR tech and rising gaming popularity push the demand

AR/VR industry has wide applications in the Media and Entertainment (M&E) sector and forms a key growth area in the US and global markets. Growth in demand of this technology is driven by factors such as the ever-rising penetration of smartphones, rising popularity of gaming, increasing affordability of AR/VR technologies, and subsequent surge in AR/VR adaptability by consumers.

Technology giants continue to work on the AR/VR to bring accessibility, mobility, and pricing to the table

A number of tech giants have realized that AR/VR will be among the most widely used technologies and have entered into the field to build related products. Some of the large companies active in the segment include – Microsoft, Facebook, HTC, Sony, Google, and HP. As an example:

Microsoft Corp: In March 2021, Microsoft launched Mesh platform and Holo lens, combining the capabilities of these two technologies AR & VR that could find use-cases in a range of industry verticals including media and entertainment
Facebook Inc. (Meta): The company has made a series of acquisitions in the gaming space like BigBox VR, Unit 2 Games, and BeatGames. FB is also making its foray in virtual reality and is operating five research facilities around the world to build an AR/VR product named Oculus. “The goal that we’ve had is to continue to develop new use cases beyond just gaming that make VR something that people use in multiple areas of their lives,” Andrew Bosworth, Head – reality labs at Metaverse (October 2021).

VR video slowly picks up as VR content

Although gaming remains the prominent VR content in current times, as well as in the coming future VR video will also register a 2020-2025 CAGR of 17.88%. Primary inhibiting factors for growth are attributed to problems such as bulky headsets and high prices of headsets. In recent times, 360 degree videos are becoming very popular and are often shared by people in social media, which does not require a VR headset viewing. NASA’s 360 view of the moon is one such example, which was widely circulated on social media.

AR/VR based learning and development – a key use-case model

AR/VR finds wide application in training and educational fulfillment purposes. Instructive training is a growth area that has a wide use case in a range of training arenas such as – for soldiers in military and defense training, training for technicians in oil & gas, engineering, and manufacturing sectors, besides others.

Digital sports gain ground

eSport, an emerging industry that is witnessing aggressive funding and sponsorships. European football teams such as Manchester City and Juventus are experimenting with AR/VR, and are developing interactive apps to be used in Oculus headsets. Further, Facebook is also exploring ways to emulate the National Basketball Association’s countryside seat in virtual reality.

Conclusion

AR/VR trend signals a wide adoption of the technology in the coming decade in both B2C and B2B space, wherein it will be a part of mainstream life. Not only it presents a more immersive way to intersect with humans and technologies, it will also open an array of possibilities in diverse industries, including the media & entertainment with a range of use-cases. Media and entertainment companies besides other verticals are increasingly investing in the AR/VR tech companies. As per Statista, commercial use of AR/VR are expected to receive large investments in 2024, with “VR gaming, VR video/feature viewing, & AR gaming” use-case clocking the maximum investment of USD17.6 billion, followed by other use-cases like training and industrial maintenance with USD4.1 billion each, and retail showcasing (USD2.7 billion).

Sources:

https://www.globenewswire.com/en/news-release/2021/07/22/2267620/0/en/AR-and-VR-Market-to-Hit-USD-766-Billion-by-2025-Registering-a-73-7-CAGR-Report-by-Market-Research-Future-MRFR.html

https://www.pwc.com/gx/en/industries/tmt/media/outlook.html#subscribe

https://www.pwc.com/gx/en/entertainment-media/outlook-2021/perspectives-2021-2025.pdf