AR & VR - United Kingdom

United Kingdom

In the United Kingdom, revenue in the AR & VR market market is projected to reach €1,352.0m in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.50%, resulting in a projected market volume of €2,128.0m by 2029.
The largest market within this market is VR Hardware, with a market volume of €462.5m in 2024.
Although most revenue is generated the United States, in the United Kingdom is also experiencing growth in this sector.
In the AR & VR market market, the number of users in the United Kingdom is expected to amount to 57.5m users by 2029.
User penetration will be 81.0% in 2024 and is expected to reach 83.3% by 2029.
The average revenue per user (ARPU) in the United Kingdom is expected to amount to €24.6.
The United Kingdom is witnessing a surge in AR and VR adoption across education and training sectors, enhancing immersive learning experiences and skills development.

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 United Kingdom is witnessing significant growth and development due to customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. Customer preferences in the United Kingdom are driving the growth of the AR & VR market.

Consumers are increasingly seeking immersive and interactive experiences, and AR & VR technologies provide exactly that. The ability to explore virtual worlds, play games, and engage in virtual reality experiences is highly appealing to the tech-savvy population in the United Kingdom. Trends in the market further contribute to the development of the AR & VR market in the United Kingdom.

The increasing adoption of smartphones and other mobile devices has made AR & VR technologies more accessible to a wider audience. This has led to a surge in demand for AR & VR apps and games, as well as virtual reality headsets. Additionally, advancements in AR & VR hardware and software have improved the quality and realism of virtual experiences, further attracting consumers in the United Kingdom.

Local special circumstances also play a role in the growth of the AR & VR market in the United Kingdom. The country has a strong technology ecosystem, with numerous startups and established companies working on AR & VR innovations. This fosters a culture of innovation and entrepreneurship, leading to the development of cutting-edge AR & VR products and services.

Furthermore, the United Kingdom has a vibrant creative industry, with a strong presence in film, television, and gaming. This provides a fertile ground for the creation of immersive and engaging AR & VR content. Underlying macroeconomic factors also contribute to the growth of the AR & VR market in the United Kingdom.

The country has a strong economy and a high disposable income, which enables consumers to invest in AR & VR technologies. Additionally, the government in the United Kingdom has been supportive of the AR & VR industry, providing funding and incentives for research and development in this field. This has created a favorable environment for companies operating in the AR & VR market, encouraging further growth and innovation.

In conclusion, the AR & VR market in the United Kingdom 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 vibrant creative industry, and a supportive government contribute to the thriving AR & VR market in the United Kingdom.

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).