Long-term growth of the augmented reality market may mean less reliance on smartphones for consumers.
Furthermore, the dollars flowing in the AR and VR market will shift from hardware, content and services to commerce, according to a new study.
By 2035, augmented reality alone has the ability to capture a quarter of the mobile commerce market, which will be more than $1.3 trillion, according to the study from Citi’s Global Perspectives and Solutions Group.
The study, which forecasts the entire AR and VR market to grow to $2.16 trillion by 2035, also predicts the use cases for AR and VR to evolve.
After 2020, the AR market will grow more than the VR market across the board, according to Citi. Between 2020 and 2025, the VR hardware market will grow 2%, while the AR hardware market will grow 68%.
This seems to be consistent with other projections for AR and VR, although the timeframe might be different.
For example, IDC forecasts AR and VR revenues to grow to $162 billion by 2020, with VR dominating in the short-term. Unlike the Citi study, IDC forecasts the shift from VR leading in revenue to AR leading to happen as soon as next year.
Here is the breakdown of expected growth between 2020 and 2025, according to Citi:
In the long-term, the use of VR and AR will shift heavily toward commerce. In four years, $71 billion will be spent on VR and AR hardware, content and services and $9 billion will be spent on commerce.
However, by 2035, the hardware, content and services segment of the market will grow to $827 billion while the commerce segment will grow to more than $1.3 trillion, according to Citi.
This shift will also have an adverse effect on other markets. Most of the growth in AR after 2025 will come directly from encroaching on the smartphone market.
Online retail will mostly be occupied (57%) by mobile by 2025 with AR commerce holding 1%.
Between 2025 and 2035, AR will grow to hold a quarter (25%) of the commerce market and less than half (46%) of commerce will come from mobile.
Non-mobile e-commerce will shrink from 42% in 2025 to 23% in 2035, according to Citi.