Virtual Production Market

Market Overview

The global virtual production market size was valued at USD 1.82 billion in 2022. It is estimated to reach USD 7.89 billion by 2031, growing at a CAGR of 17.7% during the forecast period (2023–2031). The innovation and advancements in technology and the increasing demand for VFX drive market’s growth.

Virtual production enables filmmakers to observe and evaluate digital sequences in an interactive manner, which was previously impossible. When I first tried, I failed miserably. These scenarios can feature the studio's photo-realistic virtual actors, three-dimensional visuals, and a real-time virtual interactive background world. The substantial developments made in virtual production over the years have led to the introduction of solutions that enable filmmakers to convert the motion-captured movement of an actor to the movement of virtual characters. These solutions have been made possible as a result of the significant breakthroughs that have been made in the field of virtual production.

The tremendous developments that have been made in the field of virtual production over the years have made these solutions feasible. As a result of these advancements, it is now viable to implement them. After that is complete, live-action footage and virtual set expansion elements can be combined with these virtual characters to produce a preview that takes place in real-time.

Market Dynamics

Global Virtual Production Market Drivers

Innovation and Advancements in Technology

Filmmakers can now use facial-capture training data to produce more realistic computer-generated characters. The latest Marvel Avengers movies used cutting-edge visual effects to turn Josh Brolin into Thanos. The increasing use of artificial intelligence in content development for action simulation, three-dimensional texturing, and post-process motion-capturing data will lead to sophisticated visual effect software functionalities. Artificial intelligence has improved computer-generated graphics in virtual production technology.

Designing and visualizing complicated situations in a three-dimensional model, modifying and reviewing in real-time, is now easy. The technique lowers crew and equipment transportation and logistical expenses, benefiting the market. It lets filmmakers capture on-set live-action scenarios with simul-cams or virtual cameras and blend computer-generated 3D graphic elements with live-shooting video to create the final visual effects. Pre-production support from AI speeds up video production. In the past decade, pre-production depended on unstructured box office statistics and limited viewer demographics, resulting in less compelling video content. However, artificial intelligence can analyze enormous data sets from multiple platforms to determine content approval and interest.

Increasing Demand for VFX

LED video wall technology is boosting virtual production in media and entertainment. The Mandalorian TV series uses semi-circular LED video walls for in-house shots and virtual production technologies for overall production, eliminating on-location shoots. LED video walls allow filmmakers to capture real-time visual effects with computer-generated imagery. LED video wall screens replace a shoot location and save time and money.

Video makers use virtual production technology because web series with visual effects and three-dimensional graphics are popular. Games of Thrones, The Last Kingdom, Black Mirror, and Outlander use visual effects to create epic and historical settings. VFX enhances video footage with realistic graphics and artificial scenes. Virtual production technology eliminates the need to shoot at expensive locations and brings pre-visualization on set, reducing video production expenses. Pre-visualization generates a three-dimensional depiction of the final visual effects action sequence to help filmmakers arrange camera positioning and other creative/technical requirements. Market players are investing heavily to gain an edge.

Global Virtual Production Market Restraint

Creative And Technical Challenges

Virtual production can generate a film with better visuals and lower production costs, but industry personnel lack training and expertise, causing creative and technical issues. Virtual elements must match live-action videos in virtual production sets. Thus, a visualization contains realistic surface textures, lights and shadows, and fluid simulations for a film-like experience. Real-time engines, animations, assets, textures, and materials determine output. Thus, it requires trained artists. Virtual production lacks physical feedback, and actors are blind to the set.

Therefore, they cannot use their perception to perform. Real-time visual effects and game engines pose unique obstacles. Engineers must capture, store, and distribute all motion data during virtual production. Inaccuracies like jitter or flipping joints must be cleaned immediately. Therefore, facial performances, limb rotation, and camera qualities like aperture, focal length, position, and orientation are continuously assessed.

Global Virtual Production Market Opportunities

Increasing OTT Platform Trend

OTT virtual production is expected to grow as entertainment becomes more accessible. OTT spaces have grown due to the ability to stream content from an endless collection. OTT platforms have disrupted entertainment. It makes watching movies easier, cheaper, and more accessible. Anyone with a smartphone and internet can watch movies anywhere. According to the Sony Group, Netflix, Inc., Hulu, Amazon Prime Video, and Apple TV+ have invested heavily in original programming.

In technology, these four companies have invested more in specific content. OTT players' strategic moves have boosted virtual production demand. Don't Look Up, The Gray Man, Slumberland, The Adam Project, and Stranger Things 4 are Netflix originals produced by the latter company. Thus, Netflix's investment in Scanline's pipeline, equipment, people, and backing of Eyeline Studios' creative virtual production efforts aims to extend its capabilities.

Regional Analysis

Based on region, the global virtual production market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global Virtual Production market shareholder and is estimated to exhibit a CAGR of 15.1% over the forecast period. Early adopters in the North American market, such as the United States and Canada, are pioneering new horizons for the applications of virtual production technology. The widespread use of smart television sets equipped with built-in internet and other web-based interactive features will continue to be a primary driver of growth in this market.

Furthermore, it is anticipated that leading film studios in the region, such as Viacom CBS, Walt Disney Studios, NBC Universal, and Warner Media, will have a positive influence on the growth of the region as a result of their high implementation of virtual production and increasing adoption of advanced VFX and virtual production technologies. In addition, the considerable investments made by the enterprises in research and development to develop innovative software solutions for virtual production also contribute to the acceleration of market development in the regional area.

Europe is anticipated to exhibit a CAGR of 6.8% over the forecast period. During the period that is being forecasted, it is anticipated that Europe will expand significantly. Throughout the time covered by this projection, the expansion of visual effects technologies is anticipated to be a primary driver of market growth in the European area. The popularity of VFX-based movie and television genres, in addition to recent developments in virtual production, will fuel the expansion of the market in the region.

In addition, MARS Volume's specialized commercial facility in London opened for virtual productions in August. Bild Studios, a group of visual trailblazers and media innovators, is responsible for the design and construction of it. This location will be a center of excellence for research and development activities about virtual production workflows and technology. Bild Studios, a group of media innovators and visual forerunners, is responsible for its design and construction.

The Asia-Pacific regional market is anticipated to experience significant growth throughout the projection period. The demand for virtual production technologies is mostly driven by Australia, China, Japan, South Korea, and India, which have some of the highest use rates of this technology in movie studios. The increased demand for online video streaming and the popularity of on-demand video content in the region are driving the market's expansion.

Additionally, the region's film industry was among the first to adopt cutting-edge technology filmmaking solutions. Artificial intelligence and machine learning have significantly improved the quality of computer-generated visuals thanks to virtual production technology. Moviemakers may create better computer graphic characters by combining cutting-edge technologies with virtual production and using facial-capture training data that transforms pictures into real-time characters. Additionally, these capabilities will speed up the creation of a 3D model and raise the caliber of the visual effects.

South America contributes very little to the overall market's revenue, but it is anticipated to rise significantly during the projected period. Enterprises in the area are tapping into initiatives to increase VR business. For instance, the Argentine city of Mendoza has already begun to integrate virtual reality thanks to the efforts of Inamika Interactive, a firm situated there. For the dinosaur exhibit at the Museum of Mendoza, it has created a virtual reality tour. Other initiatives include a virtual reality component and an artwork for the Argentinean version of Disneyland, "Mafaldaland," which will star Quino 'Mafalda,' dubbed the "Argentine Mickey Mouse," a well-known cartoon character.

Over the forecast period, the growing adoption of virtual production technology in television programs and studios is anticipated to drive the demand for virtual production hardware such as motion capture workstations, simulation cameras, and virtual camera systems. Realistic virtual characters and 3D design in video games, films, and web series are anticipated to increase the demand for computer graphics cards. In addition, introducing a captivating experience permits a new level of gaming interaction and 360-degree views of graphic content. Consequently, players can use their senses to monitor and control the gaming environment. Consequently, the increased deployment of virtual production technology in gaming is anticipated to stimulate market expansion. Cloud Gaming services are also expanding exponentially, necessitating a pricing model encouraging adoption and generating adequate returns for publishers and platforms.

Segmental Analysis

The global virtual production market is bifurcated into components, type, and end-user.

Based on the components, the global market is bifurcated into hardware, software, and services. 

The software segment dominates the global market and is projected to exhibit a CAGR of 16.5% over the forecast period. The software sector is projected to remain in the leading position during the forecast period, given that it is the segment responsible for the largest market share. The growing usage of computer-generated graphics and visual effects in commercial advertisements and movies would positively influence the expansion of the sector. This is because both types of imagery may be created on a computer. Additionally, technological breakthroughs in virtual production software make it feasible to generate more appealing content by utilizing more powerful VFX frameworks. This is made possible because these developments are making it possible.

Additionally, the rising incorporation of machine learning and deep learning into virtual production solutions is projected to support the creation of software with more value-added features, further fueling the industry's growth as a whole. This is one of the factors driving the sector's growth.

Based on type, the global virtual production market is segmented into pre-production, production, and post-production.

The post-production segment dominates the global market and is predicted to exhibit a CAGR of 15.3% during the forecast period. The majority of the global market's traditional revenue comes from post-production. Filmmakers and cinematographers plan sequences using shot lists and storyboards, and they film scenes on locations and sets utilizing green screens. Following the conclusion of filming, VFX development and editorial begin and end.

However, over the next few years, the preproduction and production segment is anticipated to experience significant expansion. It is easier to continuously refine the final feel and look throughout the production process when VFX is started in preproduction since it makes digital assets available for planning and shooting. In addition to traditional filmmaking, virtual production allows studios to pursue superior innovation while keeping an eye on the cost and production time. Virtual production and VFX technologies at early stages are becoming more popular among film studios and filmmakers as a technique to utilize technology throughout the production life cycle better.

Based on end-users, the global market is divided into movies, television, commercial ads, online videos, and others. 

The television segment is the most significant contributor to the market and is estimated to exhibit a CAGR of 18.2% over the forecast period. Digital content and web series with three-dimensional graphic settings and visual effects are boosting virtual production technologies in video content. Black Mirror, The Last Kingdom, Outlander, and Game of Thrones use visual effects to create epic situations. VFX creates realistic scenes and people for better video content. Virtual production technology reduces video production expenses by bringing pre-visualization on set and eliminates the need for pricey locations.

Pre-visualization helps filmmakers arrange camera positioning and other creative/technical needs by illustrating the final visual effects sequence in 3D. Television is expected to rise the fastest due to increased TV penetration in emerging countries. Smart TVs with internet and interactive web functions allow users to watch videos, browse online, etc. Due to these, the television segment is expected to exceed the movie segment in market revenue and take the greatest market share by the end of the projected year.

Recent Developments

• May 2022- Mo-Sys Engineering Ltd. announced the launch of new Virtual Manufacturing courses to meet the rising need for educated technicians in the virtual production industry. This enhanced and comprehensive program has been meticulously crafted and is expected to be taught by the Mo-Sys Academy.
• May 2022- Technicolor partnered with Paramount Pictures and director Jeff Fowler to bring a fully computer-generated imagery (CGI) Sonic to life in Sonic the Hedgehog 2 in collaboration with Technicolor Creative Studios' MPC.