The US delivered more AR/VR revenue than China last year, but Chinese growth in the next 5 years could see it dominate AR/VR long-term – to the surprise of some and not to others.

According to Advanced Television, Digi-Capital’s Augmented/Virtual Reality Report Q2 2018 shows that China has the potential to take more than $1 of every $5 spent on AR/VR globally by 2022. The natural advantages of the Chinese AR/VR market are a golden opportunity (or threat) for domestic and international players. Combine China with other major countries in the region, and Asia could deliver around half of AR/VR global revenue in 5 years’ time. Western companies might need to adopt a “we try harder” approach to compete at the same level.

Since 2015 Digi-Capital has said that ubiquitous AR could dominate focused VR long-term. While the two markets might merge into unified ‘XR’ (or some other acronym) one day, they could have very different dynamics for the foreseeable future. AR (mobile AR, smartglasses) could approach 3.5 billion installed base and $85 billion to $90 billion revenue by 2022, while VR (console, PC, mobile, standalone) might deliver 50 to 60 million installed base and $10 billion to $15 billion revenue in the same timeframe.

Consider China’s market dynamics, business models and economics:

  • China drives 40 per cent of global eCommerce, and its mobile payment market is 11x the US
  • Apple took 85 per cent of Chinese premium smartphone shipments in Q4 2017
  • China overtook the US in iPhone sales in 2015
  • Mobile advertising could take 60 per cent of Chinese advertising and over 80 per cent of Chinese digital advertising long-term
  • As early as 2014, Chinese domestic Android app stores rivalled Google Play worldwide outside China
  • Chinese iOS developers have earned $17 billion so far (25 per cent of global iOS app store revenues)

The future looks interesting, and it’s worth a deeper look sometime. But for now, the stats look intriguing. Also be sure to follow Advanced Television for some EXCELLENT content!

Tom Ffiske
Twitter: @TomFfiske
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