Generative AI Market Research Report: Forecast (2023-2028)

Market Definition

Generative AI is referred to artificial intelligence (AI) systems that can generate content like images, music, and text in response to prompts. This system employs generative models, such as large language models, to statistically sample new data based on the training data set. These models use machine learning algorithms to learn patterns in existing data & generate new content based on those patterns.

Market Insights

The Generative AI market is projected to grow at a CAGR of around 29.4% during the forecast period, i.e., 2023-28. The market had minimal growth in the past years, however, it has picked up pace from 2021 and is estimated to continue to grow at the same momentum during the forecast period as well. The market for generative AI is driven by several factors, including the increasing adoption of AI in various industries, the growing demand for personalized & unique content, and the development of new & more advanced AI technologies. The proliferation of big data & the availability of powerful computing resources has made it possible to train more sophisticated generative AI models in the coming years.

Additionally, generative AI utilizes unsupervised learning algorithms for spam identification, image compression, and preparing data stages like eliminating noise from visual data to enhance picture quality. Moreover, image categorization & medical imaging also involves supervised learning techniques. It also has uses in several different fields, including BFSI, healthcare, automotive & transportation, IT & telecommunications, media & entertainment, and others.

However, this technology is still in its initial stage, which would necessitate a skilled workforce & significant investment in implementation to a larger extent. Therefore, big companies are investing in this technology to develop a range of AI-based products & expand into a new market. For instance, Salesforce Ventures, in 2023, announced a USD250 million fund to bolster the start-up ecosystem in generative AI. Henceforth, it would accelerate the market growth of this technology in the forecast period.

Furthermore, the applications of this technology are countless, and they have the immense potential to transform businesses & sectors by altering how businesses operate. Further, to build fresh virtual worlds & gaming settings, AI developers frequently use this technology. Using this technology in suitable cases, such as VR games & VR training simulations, has the potential to dramatically increase their efficiency as it enables virtual reality (VR) creators to construct a limitless library of distinctive & immersive gaming worlds, which is significantly paving the market enlargement across the globe.

Market Dynamics

Key Driver: Rising Demand for Generative AI in Healthcare

The rapid adoption of generative AI in various healthcare settings like hospitals, pharmaceutical companies, R&D laboratories, etc., to support the growth of drug discovery, personalized therapy, diagnosis, etc., is one of the major factors pushing the market forward in the coming years. The integration of this technology in the drug discovery process to analyze a large amount of information, such as health & genomic data, to identify patterns, and predict outcomes, has enhanced its demand in the healthcare sector. For instance, Mitsui and NVIDIA announced a collaboration to use Japan’s first generative AI Supercomputer to accelerate the drug discovery process in 2023. Furthermore, the growing demand for assist chatbots in the healthcare industry to provide personalized assistance to patients & improve customer experience is further driving the demand for this technology.

Possible Restraint: Data Privacy Associated with Generative AI Would Hamper the Market Growth

Data privacy concerns act as a significant challenge for the Generative AI market, as many organizations hesitate to deploy this technological model due to the need to share their data sets with the software, as this could result in a breach of their sensitive data. The reluctance of organizations to share their data sets with generative AI software can impact the market negatively. It can lead to the limited availability of high-quality training data, which is essential for developing accurate technology models. In turn, hindering the development of new solutions & limiting the scope of existing ones.

Growth Opportunity: Rapid Adoption of Generative AI for Interactive Experience in Media & Entertainment Industry

Generating AI has the potential to revolutionize the media & entertainment industry in the future. Due to this, the industry is rapidly adopting this technology to create captivating visuals, generate stories & music, program video games, etc., to offer an interactive experience that is more immersive, personal, and dynamic to the consumer. Therefore, media & entertainment companies are planning to invest in this technology to reduce the developing time of the content, which results in the low operation cost for the companies.

Consequently, the industry's prominent investment in this technology would create a growth opportunity for the market in the forthcoming years. For instance, in 2023, Scenario Games invested USD6 million to generate game art assets with the help of Generative AI.

Key Trend: Rising Use of GANs (Generative Adversarial Network) to Create Highly Realistic Data

The gradual increase in the usage of GAN (Generative Adversarial Network) in generative AI to have realistic data is trending in the AI industry. Due to its deep learning & the feature to access the pattern of the user, which generates a high-quality result, is increasing its output efficiency. Therefore, the usage of GAN has been rising since the historical years, i.e., 2020- 2021. This resulted in the gradual adoption of GAN in various industries like automobiles, media, etc., to understand the preference & choice patterns of the consumer and create their offering accordingly. Hence, it generates the demand for GAN for the technology, further propelling the market growth in the forecast year.

Market Segmentation

Based on the Offering:

• Software
• Service

Above all, Software experienced noteworthy growth in demand during the historical years by making generative AI more accessible & easier to use for businesses & organizations. It offers scalability, efficiency, customization, and user-friendly interference to the consumer, which can result in cloud-based infrastructure & distributed computing.

Moreover, various software tools & frameworks offer customization options, allowing businesses to tailor their generative AI models to their specific needs. This makes it possible to create unique & innovative solutions that can give businesses a competitive edge in the market. Thus, the software is driving the demand for this technology in the market by making it more accessible, efficient, customizable, user-friendly, and inferable with other technologies.

Based on Deployment:

• Cloud
• On Premises

The Cloud-based solution holds the major share in the market during the historical years. As they can easily be accessed from anywhere with an internal connection, making them highly flexible & convenient for remote businesses. Additionally, cloud-based solutions are typically more cost-effective as they eliminate the need for businesses to purchase & maintain their hardware & infrastructure as well as can be easily scaled up or down depending on the needs of the business. Hence, this resulted in the adoption of cloud-based AI generative services by various companies.

Consequently, the ease of accessibility, cost-effectiveness, and customization scale-up of cloud-based service would drive the demand for this technology in the forecasting year.

Based on Technology:

• Generative Adversarial Network
• Transformers
• Variation Auto Encoders
• Diffusion Networks

Above all, Generative Adversarial Network witnessed considerable growth in the market during 2018-2022. The major factor contributing to its expansion is deep learning which involves the usage of artificial neural networks that can learn from large datasets to make predictions or generate new content. The process of generating realistic & novel content by inculcating GAN technology for several applications used in Music, Art, Healthcare, etc., to generate new synthetic data, which is even used to create data for medical imaging or drug discovery, thus assisting the demand for the technology in the market.

Regional Projection

Geographically, the Generative AI Market expands across:

• North America
• South America
• Europe
• The Middle East & Africa
• Asia-Pacific

Among all, North America holds the major share in the Generative AI market. This can be attributed to several factors, including the rising demand for pseudo-imagination & medical care, as well as the increasing incidence of banking frauds in the region. Additionally, the presence of prominent market players such as the US-based Meta, Microsoft, and Google LLC, along with other developed technology organizations, is likely to drive the market in North America.

These companies have made significant investments in research & development and have created advanced technologies that are capable of producing accurate and effective results. In addition, the region has a well-established academic & research infrastructure, which has produced a large number of skilled professionals with expertise in artificial intelligence and related fields.

Recent Developments in the Generative AI Market

• 2023: The company, Google invested around USD300 million in generative AI startup 'Anthropic', as part of the search giant’s foray into this technology. In this investment, the company has taken about a 10% stake in the company to boost the finances of the Anthropic.
• 2023: Microsoft announced an investment of nearly USD10 billion in an open AI lab, as a funding round in the company to boost its effort in the web search market.

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