Virtual Production Market (2024 - 2030)

Virtual Production Market Summary

Vast developments in the field of virtual production over the years have led to the introduction of solutions that allow filmmakers to transfer the motion-captured movement of an actor to virtual characters, which are then previewed in real-time, in combination with live-action footage and virtual set extension elements. Such solutions help filmmakers plan and communicate their creative ideas in new and more intuitive ways. The increasing demand for visual effects (VFX) in movie production studios worldwide and rising application scope of virtual production in commercial ads are likely to drive market growth.

During the pandemic in 2020, prominent Hollywood filmmakers, including NBC, MTV, and ABC, began adopting Virtual Production using cloudbusting, which involved using a robotic camera like the Solo Cinebot, to shoot the actors remotely. The increased adoption of LED video wall technology is augmenting the implementation of virtual production across the media and entertainment sectors. LED video walls display computer-generated graphics in the background and enable filmmakers to capture visual effects in real time. The LED video wall technology has substituted a green screen, making film production more accessible after the break of COVID-19. For instance, in April 2020, ABC's show SkyLine filmed all their real-life scenes in a 360-degree camera and displayed them on the LED screen instead of the green screen. LED video wall screens create a realistic background visual that replaces an actual shoot location while saving the entire crew time and money.

For instance, The Mandalorian TV series has extensively used semicircular LED video walls for the in-house shoot and virtual production technology for overall production, eliminating the need for on-location shoots. Disney used LED walls of dimensions 20 feet high, 75 feet wide, and 270 degrees, which made it possible to present the movement of the 3D image concerning the camera's movement. The rising popularity of web series containing visual effects and three-dimensional graphic environments encourages video-makers to implement virtual production technology in their video content. Popular web and television series, such as Games of Thrones, The Last Kingdom, Black Mirror, and Outlander, have extensively implemented visual graphics to create epic and historical scenes. VFX helps produce high-quality video content with realistic graphic characters and artificial scenes that enrich the viewing experience.

Moreover, virtual production technology helps reduce video production costs by eliminating the need to shoot at expensive sites and bringing pre-visualization (a part of the pre-production process) on set. Pre-visualization creates a first three-dimensional representation of the final visual effects action sequence to help movie-makers plan out camera placement and other creative/technical requirements. For instance, in April 2022, HTC VIVE, a computer and electronics manufacturing company, released a virtual production technology named VIVE Mars CamTrack. It accelerates, simplifies, and lowers the cost of virtual production software by combining the complete camera tracking workflow into a small plug-and-play module with professional-grade functionality.

In many cases, the use of VIVE Mars Cam Track eliminates the need to shoot on-location and allows filmmakers to fully express their creative vision by allowing performers to instantly jump into any number of virtual backdrops as a scene is being shot. With the advent of advanced technologies in virtual production, filmmakers can create more advanced computer graphic characters using facial-capture training data to transform visuals into real-time characters. The most recent example of advanced visual effects is the transformation of actor Josh Brolin’s face into the lead villain Thanos in the latest Marvel Avengers movie series. Furthermore, artificial intelligence (AI) and machine learning (ML) features are expected to enhance the quality of visual effects further and simplify the design process of a three-dimensional model. The growing applications of AI in content creation for action simulation, 3D texturing, and post-process motion-capturing data are expected to lead to the development of advanced visual effect software functions.

Market Concentration & Characteristics

The innovative production technologies and approaches of its implementation are evolving rapidly to allow filmmakers to generate, visualize, and control digital environments in real-time. Cutting-edge technologies like real-time rendering, AI-powered cameras, and advanced LED walls drive continual market expansion.

The level of M&A activities in the market is rising significantly. Strategic acquisitions target companies offering specialized hardware, software, or expertise to expand product portfolios and gain market share. Acquisitions can be a strategic way to tap into promising new technologies like volumetric capture or extended reality (XR) solutions, giving companies a head start in future developments. The collaboration between technology giants and creative studios enhances the advancements in virtual production, subsequently fueling increased consolidation of the market.

The impact of regulations is estimated in the low to moderate range. However, emerging. safety regulations for LED walls and potential concerns over deepfakes are arising. Governments may introduce safety standards to ensure the well-being of filmmakers and actors. The deepfake’s ability to manipulate video realistically through virtual production raises ethical and legal questions. Regulations around deepfakes could impact the usage and distribution of virtual production technologies.

Traditional filmmaking remains a viable alternative, especially for budget-conscious projects. However, virtual production's efficiency and creative flexibility pose a growing challenge. Virtual sets eliminate the need for location scouting, construction, and travel, potentially reducing production costs. Virtual environments offer limitless possibilities, allowing filmmakers to create fantastical worlds or manipulate existing locations with ease.

End-user concentration in the market is at a moderate level. The movies & television segment currently dominates the market, followed by the commercials & online videos segment. Furthermore, diversification into live events, gaming, and virtual tourism is expected to reduce the market concentration over the forecast period.

Component Insights

The software segment accounted for the largest revenue share of 41.8% in 2023 and is expected to retain its dominance from 2024 to 2030. The rising visual effects applications and computer-generated graphics in movies and commercial advertisements are expected to influence market growth positively. An increase in the implementation of virtual production and the expansion of various products in the gaming industry will also positively impact market growth. Also, ongoing technological advancements in virtual production software solutions allow the development of engaging content by incorporating advanced VFX features. Furthermore, the growing inclusion of machine learning and deep learning in virtual production solutions is expected to drive the development of software with more value-added features, fueling the segment growth.

The hardware segment is projected to expand at a significant pace and is expected to hold the second position, in terms of market revenue, from 2024 to 2030. This can be attributed to the considerable rise in the use of virtual production LED video wall screens for real-time background visuals required for in-house shoots. The increasing use of virtual production technology in film studios and TV shows is expected to boost the demand for hardware, such as motion capture workstations, virtual camera systems, and simulation cameras. The rising popularity of 3D designs and realistic virtual characters for movies and video games is expected to drive the demand for computer graphics cards. For instance, in January 2022, Sony Corp. added a crystal LED to enhance its video production.

Sony Innovation Studios redefined settings for film and television productions with its most recent technology that generates 3D volumetric point cloud data in Japan. The service segment is anticipated to emerge as the fastest-growing segment from 2024 to 2030. Owing to the lack of trained professionals in VFX and virtual production technology, moviemakers or film studios often hire professional agencies for their services to implement VFX in their video productions. Moreover, services are mainly required during the production and post-production of any video content. The rising number of new videos on various broadcasting platforms is fostering the growth of the service segment. The segment is anticipated to register the highest CAGR of 20.1% from 2024 to 2030.

End-user Insights

The movies segment accounted for the second-largest revenue share of 28.5% in 2023. A substantial increase in movie production budgets and the high usage of VFX in Hollywood and other regional movie studios fuel the growth of this segment. The rising trend of shifting movie broadcasts from cinema halls and multiplexes to over-the-top (OTT) platforms allows filmmakers to reach a larger audience, which is expected to drive the growth of the segment from 2024 to 2030. The TV series segment is expected to register the fastest CAGR from 2024 to 2030.

This can be attributed to the increased penetration of television sets in developing regions. Moreover, the increased uptake of smart television sets with advanced technological features, such as integrated internet and interactive web, allows users to access the internet, view web pages, watch videos, and view photo slideshows on these devices. The segment is anticipated to outshine the movies segment, in terms of total market revenue, and hold the largest share by the end of the forecast period.

Type Insights

The post-production segment accounted for the largest revenue share of 50.7% in 2023. This can be attributed to its crucial role in editing and collaborating post-shoot videos with graphics and visual effects (VFX). The segment is expected to witness promising growth opportunities over the forecast period due to the constant rise in new video production projects on various video platforms globally, and filmmakers adapting virtual production methods due to the limitations caused by the COVID-19 outbreak. For instance, in August 2023, Mo-Sys Engineering announced the incorporation of Content Server Solution VP Pro XR LED at Solent University in Southampton, UK.

It is equipped with an LED wall and a Mimik lighting panel, offering a blend of lighting and cinematic reflections. This setup, coupled with Mo-Sys's StarTracker and VP Pro XR, is set to enhance film production courses at Solent University. The production segment is anticipated to register a promising CAGR from 2024 to 2030. The collaboration of high-quality visual graphics with a motion-captured imagery character in a 3D environment has become highly popular in recent times. It replaces the concept of a green screen and goes physically to film different scenes. Performance capture through a virtual camera enables video-makers to portray an imaginary character’s action by simulating a real actor’s movements.

The scene can be simultaneously projected in a realistic graphics environment generated through the computer or a live LED wall in the background. The collaboration of visual graphics and imagery characters through motion capture is gaining traction and is likely to influence market growth. For instance, in May 2022, Technicolor, a France-based entertainment provider, partnered with Paramount Pictures, a U.S.-based entertainment provider, and director Jeff Fowler, an American filmmaker, to create a fully computer-generated Sonic (a cartoon character) for Sonic the Hedgehog 2, a film based on the video game series by SEGA.

Regional Insights

The virtual production market in North America accounted for the largest share of 36.5% in 2023. This can be attributed to the extensive application of virtual production in major film studios in the region, including NBC Universal, Viacom CBS, Warner Media, and Walt Disney Studios. Moreover, substantial investments of companies in the region in R&D activities to develop advanced virtual production software solutions also support the development of the regional market.

U.S. Virtual Production Market Trends

The U.S. virtual production market is expected to grow at a CAGR of 15.9 % from 2024 to 2030 owing to the prominent technological innovation in the U.S. For instance, in December 2022, the most significant LED wall virtual production stage in the U.S. was unveiled by Amazon Studios. The drum-shaped stage is 26 feet tall and 80 feet in circumference, one foot less than a Vancouver stage that is currently considered the biggest in the world.

Europe Virtual Production Market Trends

The virtual production market in Europe is expected to witness significant growth from 2024 to 2030 due to the advancement of visual effects technologies. The prevalence of VFX-based television and film categories and recent innovations in virtual production are expected to spur market expansion in the area.

The UK virtual production market held a significant share in 2023. The UK government recently revealed substantial investment in the country's creative sectors, including virtual production. This expenditure is anticipated to contribute to developing the infrastructure required to support the rising demand for services including sound stages and virtual production facilities.

Asia Pacific Virtual Production Market Trends

The virtual production market in Asia Pacific is anticipated to register the highest CAGR from 2024 to 2030. The growth is attributable to one of the highest implementing rates of virtual production technology in film studios in Australia, China, Japan, South Korea, and India, the major countries that drive the demand for virtual production technologies. For instance, in May 2022, Mo-Sys Engineering Ltd., a prominent media production company, announced a partnership with GMS International, a software development company. Through this partnership, they make AR and virtual production solutions accessible to broadcasters and cinematographers in South Korea.

The India virtual production market is anticipated to experience the fastest CAGR from 2024 to 2030 due to the rapidly increasing demand for original OTT streaming content in the country, pushed by mobile broadband utilization and reduced data charges. In addition, the India Brand Equity Foundation (IBEF) reports that in 2021, phone-based gaming apps will make up 86% of all gaming apps, with the Indian gaming industry recently surpassing the U.S. in terms of user population, reaching 300 million.

Key Virtual Production Company Insights

Key virtual production companies include Adobe; Autodesk Inc.; Epic Games, Inc.; HTC Corporation (VivePort); Mo-Sys Engineering Ltd.; NVIDIA Corporation.; Pixar (The Walt Disney Company); and Technicolor. The market's competitive landscape is fragmented and features the presence of several players. In recent years, the market has witnessed several mergers, acquisitions, and strategic partnerships. For instance, in March 2020, Epic Games Inc. acquired Cubic Motion, a highly detailed digital facial animation provider for both films and video games. The acquisition would further enrich visuals and three-dimensional graphic environments for the users of Epic Games Inc. solutions. Also, in December 2022, the most significant LED wall virtual production stage in the U.S. was unveiled by Amazon Studios. The drum-shaped stage is 26 feet tall and 80 feet in circumference, one foot less than a Vancouver stage that is currently considered the biggest in the world.

Recent Developments

• In July 2023, ROE Visual announced a partnership with Illusion XR Studio, Pixotope, and AVI-SPL, aiming to orchestrate an XR broadcast in Dubai to provide immersive experiences and valuable insights. The event was specifically designed for participants such as content creators, professionals in TV and film production, broadcasters, and esports enthusiasts keen on exploring the latest technology

• In July 2023, Mo-Sys unveiled the StarTracker Max with best-in-class features and real-time camera tracking capabilities. This new solution is designed to augment camera tracking precision and performance, making it an important tool for virtual production, film production, and broadcasting applications

• In June 2023, Mo-Sys announced its collaboration with 3LR Lighting and Bendac. The collaboration was aimed at showcasing the company’s latest solution the StarTracker Max

• In May 2023, LG announced the launch of a micro-LED display an LG MAGNIT for production studios. The display enables improved content formation, brilliant picture quality, easy installation, and other controls. LG MAGNIT provides production studios with versatile operations by enabling users to adjust the scale and magnitude of the exhibited image and select either hanging or stacking installation

• In May 2023, Autodesk introduced the cutting-edge capabilities of Autodesk Forma, the new industry cloud platform. The platform focuses on the early-stage planning & design process, delivering automation and AI-powered insights to simplify design exploration, offload repetitive tasks, and evaluate environmental qualities surrounding a building site. This enables architects to have more time to invest in creative solutions

• In April 2023, Boris FX announced the release of advanced tools—the Silhouette and Mocha Pro versions, enabling advanced paint, motion tracking, and rotoscoping. These exceptional software tools are purposed to cater to the needs of visual effects artists, compositors, and paint/roto artists, who work on VFX-heavy films and streaming/broadcast projects

• In April 2023, Borix FX announced that it acquired CrumplePop. The acquisition was witnessed as a planned move to complement CrumplePop’s AI-focused audio plugins with Boris FX's prevailing product line, including popular plugins like Sapphire, Mocha Pro, Continuum, Silhouette, and Optics

• In September 2022, Adobe unveiled the first-in-the-world cloud-driven collaboration solution for content shooting on virtual sets. This new solution is credited to a collaboration between Adobe Camera to Cloud (powered by Frame.io) and Mo-Sys

• In September 2022, Epic Games and Autodesk, Inc. announced a collaboration that was purposed to accelerate immersive real-time 3D experiences throughout varied industries, with an initial focus on architecture, engineering, and construction (AEC)

• In March 2022, Adobe introduced a series of breakthroughs, investments, and integrations that are purposed to position brands to prosper in the metaverse. For the same, the company collaborated with Epic Games, The Coca-Cola Company, NVIDIA, NASCAR, and others on 3D content creation, portable immersive experiences, and e-commerce

Virtual Production Market