Artificial lights market is estimated to be valued at USD 99.89 Bn in 2024 and is expected to reach USD 123.69 Bn by 2031. It is projected to grow at a compound annual growth rate (CAGR) of 3.1% from 2024 to 2031. The artificial lights market has been witnessing significant growth driven by various factors. They include growth in construction and infrastructure development activities and demand for artificial lights for interior and exterior illumination.

Market Driver - Increasing Emphasis on Energy Efficiency and Sustainability

The artificial lights market has been witnessing a strong emphasis on sustainability and energy efficiency in recent years. There is a growing recognition globally that energy usage needs to be curtailed and transition towards more eco-friendly alternatives is critical to curb the impacts of climate change. Strict government regulations around energy usage have compelled lighting manufacturers to invest heavily in the development of energy efficient products.

Lighting solutions based on LED and other emerging technologies offer significant energy savings compared to conventional incandescent or CFL bulbs. Sustainability has become an integral part of corporate strategies and branding across sectors. Companies want to showcase strong ESG (environmental, social and governance) credentials to investors and customers alike.

The artificial lights market is increasingly prioritizing eco-friendly product innovations and customizing solutions to meet evolving sustainability needs of varied end-users. Emergence of zero-energy buildings concept and initiatives like net zero carbon goals are compelling players to integrate sustainability at the core of their business strategies. This presents massive opportunities for next-generation energy efficient lighting systems that can aid global transition towards a low carbon future.

Market Driver - Rapid Urbanization and Infrastructure Development

Urbanization trends have been rapidly rising across both developed and developing regions over the past few decades. As per estimates by 2050, nearly 70% of world population will reside in urban settings compared to just 30% in 1950. This unprecedented rate of urban growth has necessitated massive infrastructure expansion worldwide to accommodate the needs of surging city residents.

Urban development involves construction of multi-story residential and commercial buildings, malls, hospitals, educational institutions, roadways, metro rails and other public facilities. All such infrastructure development leads to huge demand for various types of lighting equipment such as artificial lights, required to illuminate indoor and outdoor spaces adequately.

In tier 1 and 2 cities of developing nations, the pace of new construction activities is particularly high owing to agglomeration of economic opportunities and amenities in urban centers. Residential projects like housing societies, group housing complexes with thousands of units respectively require large scale installation of outdoor and indoor lightings. These factors are expected to play an important role in growth of the artificial lights market in the coming years.

Market Challenge - High Initial Cost of Adopting Advanced Lighting Technologies

One of the key challenges faced by the artificial lights market is the high initial cost of adopting advanced lighting technologies. LED artificial lights and other energy efficient solutions provide significant savings over the long run due to lower power consumption. However, their upfront costs are considerably higher compared to conventional lighting products such as incandescent bulbs and fluorescent tubes. This high initial investment acts as a barrier for many commercial and residential customers looking to upgrade their lighting infrastructure.

The installation and procurement costs for LED lights can be up to 3-4 times higher than traditional lighting technologies. Additionally, transitioning entirely to a new lighting system requires replacement of lighting fixtures, which further increases expenses. The higher costs have prevented many potential customers, especially in price sensitive regions and cost-constrained industry segments, from shifting to more sustainable artificial lights. This remains a major challenge before players in the artificial lights market.

Market Opportunity - Expansion of Smart Lighting Systems Integrated with IoT

One of the major opportunities in the artificial lights market is the expansion of smart lighting systems that are integrated with Internet of Things (IoT) technology. With improved connectivity and automation capabilities, smart lights allow lighting to be controlled remotely through smartphones and other devices. This provides benefits such as energy savings through intelligent brightness adjustment based on ambient lighting conditions, automated schedules and occupancy detection.

Additionally, smart lights also enable collection and analysis of lighting usage data which can be used for various applications such as facility management. The convergence of lighting with IoT is expected to drive significant adoption of these lighting systems across commercial, industrial, and residential sectors.

Major manufacturers in the artificial lights market are investing heavily in developing smart and connected lighting products integrated with platforms. Furthermore, smart cities initiatives worldwide are promoting large-scale implementation of smart street lights. This growing demand is poised to unlock new revenue streams for lighting OEMs and open up opportunities for IoT platform and solution providers.

Focus on Energy Efficient LED lighting:

One of the most successful strategies adopted across the lighting industry has been the pivot to LED lighting solutions. LEDs consume up to 90% less energy and last 25x longer than incandescent bulbs. Philips was one of the early movers in developing and marketing affordable LED bulbs for commercial and residential use in late 2000s. This helped Philips gain significant market share as customers looked to upgrade to more sustainable options. By 2015, Philips captured nearly 25% of the global lighting market.

Smart Lighting Innovation:

Another strategy that has seen great success is the development of smart and connected lighting systems. In 2015, signify (then Philips Lighting) launched its first Hue smart bulb, making lighting a key part of the smart home ecosystem. The success of Hue spurred other players like Cree and Sengled to launch their own WiFi enabled bulbs and lights.

Insights, By Type: Advances in LED Technology Fuel LED Dominance

In terms of type, LED contributes 32.6% share of the artificial lights market in 2024, owing to its various advantages over other light sources. LED lights have seen tremendous technological progress in recent years, with manufacturers continually improving energy efficiency, light quality, and cost. New semiconductor formulations and manufacturing techniques have allowed LEDs to produce whiter, brighter light while consuming less power.

LED lights also offer design flexibility as they can be very thin, directed, and arranged in creative patterns. As prices have declined and performance increased, LEDs have essentially replaced incandescent bulbs and made substantial inroads against CFL and halogen lamps.

Residential consumers have also widely embraced LEDs for their energy savings, reliability, and solid-state design free of fragile filaments. With further cost reductions expected, LED lights will continue dominating new installations and retrofit opportunities across all sectors.

Insights, By Application: General Lighting Dominates Amid Booming Commercial Applications

In terms of application, general lighting contributes 41.2% share to the artificial lights market in 2024, due to robust demand from both residential and commercial sectors. Well-lit interior environments are essential for living, working, learning, and leisure activities. Modern commercial facilities like offices, schools, hospitals, retail stores, and factories rely heavily on artificial lighting to support staff and visitor needs. At the same time, residential housing units continue growing around the world, fueling lighting demands for various interior spaces.

However, the commercial segment is witnessing particularly fast growth as building owners seek ways to cut costs and boost efficiency.

Specialty applications like task, accent, and display lighting are also gaining prominence as modern workplaces focus on wellness, ambiance and branding. Meanwhile, automated controls enable lights to adapt brightness based on occupancy and daylight levels. As commercial construction projects multiply and digitization enhances facility management, general lighting expenditures will continue expanding robustly across non-residential buildings.

Insights, By End User: Residential Sector Dominates Due to Rising Housing Demand

Considering end users, the residential sector holds the highest share of the artificial lights market due to the crucial need for illumination in homes. Housing remains a basic necessity and fundamental driver of consumer spending worldwide. Demand for new residential construction is rising consistently with population growth and urbanization trends in developing regions. At the same time, modernization and expansion of existing residential properties also sustain renovation activity in developed markets.

Residential artificial lights are used daily for a wide variety of tasks from reading and cooking to security and aesthetics. Various interior and outdoor lighting applications around homes necessitate a mix of general, accent, and specialty bulb and fixture types. Consumers also prioritize energy efficiency, design flexibility, and lifetime cost savings offered by latest LED and CFL products. Retail channels actively promote new residential lighting collections for continual upgrades and replacements. Governments also implement building codes and consumer incentives encouraging energy-smart lighting behavior in homes.

• The integration of IoT in artificial lights has become a significant trend, allowing for remote control and automation, which enhances energy efficiency and user convenience.
• Urbanization in Asia-Pacific regions has led to increased infrastructure development, boosting the demand for advanced lighting solutions in both residential and commercial sectors.
• LED lighting accounts for the largest share in the artificial lights market due to its energy efficiency and longer lifespan compared to traditional lighting.
• The Asia-Pacific region is projected to witness the highest growth rate in the global artificial lights market, attributed to rapid industrialization and government initiatives promoting energy-efficient artificial lighting.

The major players operating in the artificial lights market include General Electric (GE Lighting), Panasonic Corporation, Osram Licht AG, Schneider Electric SE, Cree, Inc., CITIZEN ELECTRONICS CO., LTD., Lumerica, Havells India Ltd., LEDtronics, Inc., Patriot LED, Acuity Brands Lighting, Inc., Signify N.V. (Formerly known as Philips Lighting N.V.), Eaton Corporation, Zumtobel Group AG, Hubbell Incorporated, and Samsung Electronics Co., Ltd.

• In August 2023, Signify expanded its Philips Hue product line to enhance home security by integrating smart lighting with cameras and sensors. The new offerings include Philips Hue Secure cameras and contact sensors, which can be monitored in real-time and controlled via the Philips Hue app.
• In June 2023, ams OSRAM introduced advanced horticultural lighting solutions aimed at optimizing plant growth in indoor farming. These innovations address the rising demand for sustainable agricultural practices and position ams OSRAM as a leader in artificial lights markets.
• In January 2022, Cepton, a leader in high-performance LiDAR solutions, expanded its partnership with ams OSRAM to provide LiDAR technology for Advanced Driver Assistance Systems (ADAS) and autonomous vehicles.

• By Type
  • LED
  • CFL
  • LFL
  • HID
  • Halogen
  • Incandescent
• By Application
  • General Lighting
  • Automotive Lighting
  • Backlighting
  • Others
• By End User
  • Residential
  • Commercial
  • Industrial