AR & VR - South Africa

South Africa

In South Africa, revenue in the AR & VR market market is projected to reach US$99.2m in 2024.
Revenue is expected to demonstrate an annual growth rate (CAGR 2024-2029) of 9.21%, leading to a projected market volume of US$154.2m by 2029.
The largest market within this market in South Africa is AR Software, which is anticipated to have a market volume of US$30.1m in 2024.
While most revenue is generated the United States with a projected market volume of US$10,900.0m in 2024, in South Africa is also poised to see growth.
In the AR & VR market market, the number of users in South Africa is expected to reach 33.6m users by 2029.
User penetration in South Africa will be 46.5% in 2024 and is expected to increase to 52.4% by 2029.
The average revenue per user (ARPU) in South Africa is expected to amount to US$3.5.
South Africa is witnessing a surge in AR & VR applications across education and tourism, reflecting a growing interest in immersive experiences.

Definition:

Augmented reality (AR) and virtual reality (VR) make it possible to combine the real and virtual worlds. AR is generally accessed via mobile phones and primarily relies on lenses. AR effects can be created by using lenses in social media apps, for example. AR is also used for displaying digital 3D objects in our surroundings, e.g., in gaming or eCommerce apps. Meanwhile, VR technology allows users to dive into the virtual world, and, unlike AR technology, it requires a headset device which enables the creation of virtual worlds.

Structure:

The AR & VR market consists of six different markets: AR Advertising, AR Hardware, AR Software, VR Advertising, VR Hardware, and VR Software. AR Advertising covers mobile advertising that is displayed in the most prominent social media apps. AR Hardware comprises AR headsets and glasses. AR Software is divided into three different application types, namely social media, gaming, and eCommerce applications, which can be accessed via the most prominent app stores. VR Advertising covers in-game advertising as well as advertising in VR videos. VR Hardware comprises both tethered head-mounted displays (HMDs) and stand-alone HMD headsets. Lastly, VR Software covers VR games and VR videos, which require headsets.

Additional information:

The market comprises revenues, users, average revenue per user, and penetration rates. Revenues are generated through in-app purchases, advertising spending, and consumer spending on apps, games, and hardware such as headsets or glasses. Sales channel data shows both online and offline revenues, which include VAT. The market only displays B2C revenues and users for the above-mentioned markets and markets; B2B and B2G revenues are not included. Additional definitions for each market can be found on the respective market pages.
Market numbers for VR headsets are also featured in the Consumer Market Insights, namely in the Gaming Equipment market of the Consumer Electronics market. Unlike the VR Hardware market in the Advertising & Media Outlook, the Gaming Equipment market also covers smartphone VR devices.
Key players in the market include companies such as Meta (Oculus VR), Microsoft (HoloLens), Snap Inc. with different lenses, and Nvidia, which offers computing hardware components.
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Analyst Opinion

The AR & VR market in South Africa is experiencing significant growth and development, driven by customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. Customer preferences in South Africa are playing a key role in the development of the AR & VR market.

Consumers are increasingly seeking immersive and interactive experiences, and AR & VR technologies provide just that. The younger generation, in particular, is highly interested in these technologies and is driving the demand for AR & VR products and services. Additionally, businesses in various sectors are recognizing the value of AR & VR in enhancing customer experiences, training employees, and improving productivity.

Trends in the market are also contributing to the growth of the AR & VR industry in South Africa. The increasing availability of affordable AR & VR devices, such as headsets and smartphones, has made these technologies more accessible to a wider range of consumers. This has led to a rise in the adoption of AR & VR applications in industries such as gaming, entertainment, education, and healthcare.

Furthermore, advancements in technology, such as the development of more realistic graphics and immersive experiences, are fueling the demand for AR & VR products and services. Local special circumstances in South Africa are further driving the development of the AR & VR market. The country has a growing tech-savvy population and a thriving startup ecosystem, which is fostering innovation in the AR & VR industry.

Furthermore, South Africa has a strong creative industry, including film and advertising, which can leverage AR & VR technologies to enhance storytelling and create unique experiences. These factors are attracting local entrepreneurs and international companies to invest in the AR & VR market in South Africa. Underlying macroeconomic factors are also contributing to the growth of the AR & VR market in South Africa.

The country has been investing in digital infrastructure and connectivity, which is essential for the adoption and usage of AR & VR technologies. Additionally, the South African government has been supportive of the tech industry and has implemented policies to encourage innovation and entrepreneurship. These factors create a favorable environment for the development and expansion of the AR & VR market.

In conclusion, the AR & VR market in South Africa is experiencing significant growth and development due to customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. The increasing demand for immersive and interactive experiences, advancements in technology, a thriving startup ecosystem, and government support are all contributing to the growth of the AR & VR industry in South Africa.

Methodology

Data coverage:

The data encompasses B2C enterprises. Figures are based on the AR & VR market. AR and VR enable consumers to experience a new dimension, using either a headset or installed units, as they combine the real and virtual worlds. Consumer revenue figures refer to revenues relating to AR hardware, AR software, VR hardware, VR software, and spending on AR and VR advertising. Both digital and non-digital revenues are included.

Modeling approach / Market size:

Market sizes are determined through a top-down approach, building on specific predefined factors for each market market. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and industry associations, as well as third-party studies and reports. In addition, we use relevant key market indicators and data from country-specific associations, such as consumer spending, internet penetration, 4G coverage, and historical developments. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption. The main drivers are level of digitalization, adoption of technology, GDP per capita, and internet penetration.

Additional notes:

The market is updated twice a year in case market dynamics change. The data is modeled using current exchange rates. The impact of the COVID-19 pandemic and the Russia-Ukraine war are considered at a country-specific level. In some cases, the data is updated on an ad hoc basis (e.g., when new, relevant data has been released or significant changes within the market have an impact on the projected development).