AR & VR - Worldwide

Worldwide

The AR & VR market is projected to generate revenue of €30.1bn in 2023.
This market is expected to grow at an annual rate of 13.29% (CAGR 2023-2028), resulting in a projected market volume of €56.2bn by 2028.
The largest market segment within AR & VR market is AR Software, which is expected to reach a market volume of €11.2bn in 2023.
The United States is the leading revenue generator in this market, with a projected market volume of €8,048.0m in 2023.
in the world, the number of AR & VR market users is expected to reach 6,887.0m users by 2028.
The user penetration rate is projected to be 92.2% in 2023 and is expected to increase to 104.9% by 2028.
The average revenue per user (ARPU) is expected to be €5.1.
It is important to note that the revenue values mentioned here only account for B2C revenues.
This means that the displayed market share of B2C covers 0.0% of the total market (B2C & B2B).
Worldwide, the AR & VR market has seen significant growth, with countries like China and the United States leading the way in terms of innovation and adoption.

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.
For more information on the data displayed, use the info button right next to the boxes.

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Analyst Opinion

Market drivers:

Augmented reality and virtual reality have gained a great deal of attention in recent years. Big tech companies have entered the market and consolidated their market position by acquiring several companies operating in the augmented and virtual reality industry. With constantly improving technology and an increasing number of 5G internet connections, the market is set to witness strong growth in the future.

Augmented Reality:

Social media apps, such as Snapchat, Instagram, Facebook, and, most recently, TikTok, set a milestone in the use of augmented reality in the consumer sector. Numerous innovations, e.g., new lenses and features, have attracted the attention of consumers and are now indispensable. But it is not only social media apps that have implemented augmented reality; gaming and eCommerce apps have also been able to strengthen their position in the market. With a total of more than 600 million downloads, Pokémon Go, one of the most famous augmented reality apps, reached the pinnacle of AR gaming. Since many gaming apps are following concepts similar to that of Pokémon Go, the market is exhibiting considerable growth. The eCommerce sector, for its part, is still adapting to AR and VR, but it is on its way to carving out a strong market position, with furniture apps such as Ikea Place and Wayfair or makeup apps such as Sephora. AR software is dominating the AR market, while AR hardware is still lagging behind. However, Apple will enter the market with AR glasses, thus competing with HoloLens by Microsoft, the current key player in the market. This is another reason why the AR market is set to witness strong growth in the future.

Virtual Reality:

In contrast to augmented reality, virtual reality has been a fairly common technology for quite some time now, with apps such as Google Earth, for instance. Nevertheless, VR technology will continue to advance, and the quality of headsets, stand-alone units in particular, will improve significantly in the future. With its VR headset, Meta Quest, Meta is dominating the market, accounting for more than one third of total unit sales. While there were only rather basic games in the early adoption phase, the market is moving strongly toward more sophisticated games, which require more interaction from consumers.

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).