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The extended reality market size is estimated to grow at a CAGR of 43.09% between 2022 and 2027. The market size is forecast to increase by USD 421.42 billion. The growth of the market depends on several factors, including rapid improvements in sensor technology, increasing adoption in the military, and the growing popularity of 360-degree videos.
This extended reality market report extensively covers market segmentation by application (VR, AR, and MR), component (hardware and software), and geography (North America, APAC, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The rapid improvements in sensor technology are notably driving the market growth, although infrastructural and integration issues may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rapid improvements in sensor technology are notably driving the Extended Reality (XR) Market growth. The rapid development of sensor technology, which may lead to cost reduction of sensors, will boost the growth of the market during the forecast period. With the ongoing transformation in various industries and sectors, the demand for smart sensors with high reliability, low maintenance and repair costs, and minimal replacement times is increasing. Such sensors drive operational efficiency in all business processes. For example, the healthcare industry has developed tiny optical and biopotential sensors that researchers can incorporate into wearable devices. These sensors allow doctors to diagnose a patient's health in real-time.
The miniaturization of sensors has increased the installation of sensors in nearly every possible business facility for effective monitoring and analysis. A clear focus on research and development related to sensor technology is expected to support the growth of the market during the forecast period.
The advent of the 5G network is a key trend influencing the Extended Reality Market growth. 5G technology is characterized by characteristics such as high bandwidth and low latency. Using this technology can accelerate the adoption of augmented reality products and increase the flexibility of various augmented reality applications. 5G could enable AR in live outdoor environments not covered by Wi-Fi. It requires a stable network with a latency of less than 70 ms, which facilitates cloud-based gaming. A robust and affordable 5G subscription is required for cloud gaming to work effectively.
5G networks also offer significantly lower latency than previous-generation wireless technologies. This means that there is less delay between when data is sent and when it is received and can be sent faster. This is especially important for Extended Reality(XR) applications that require real-time responsiveness to deliver a seamless and immersive experience. With 5G, XR applications can deliver the low-latency interactions and real-time responsiveness that are essential for applications such as remote collaboration and gaming. The rollout of the 5G network around the world is expected to be completed by 2024. Therefore, the advent of 5G is expected to accelerate the growth of the market during the forecast period.
The infrastructural and integration issues are challenging the XR Market growth. A key factor behind the adoption of augmented reality technology (apps and hardware) is the availability of reliable and fast internet. Most countries do not have the basic infrastructure to connect to the Internet. Few countries, such as the United States, United Kingdom, and Japan, have the technological sophistication necessary for their Internet infrastructure. This is one of the main reasons for the uneven prevalence of augmented reality in all regions. Additionally, many countries in APAC and South America are unaware of the potential of augmented reality. This has led to a decline in technology awareness among consumers. Additionally, the lack of high-speed internet hinders the adoption of this technology.
Companies that use augmented reality technology in their daily operations need strong internet infrastructure in all their facilities. Most prospective customers are waiting for the technology to mature early so they can use augmented reality and reap the benefits. This is because current users are not satisfied with the user experience provided due to a lack of hardware, content, and infrastructure. This is a bigger challenge for the corporate segment than the consumer segment. Slow adoption and connectivity issues are likely to pose serious challenges for the XR Market during the forecast period.
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Extended Reality Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
ABB Ltd: The company offers ABB Ability Augmented Field Procedures which is an extended reality platform.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the VR segment will be significant during the forecast period. The growing popularity of 360-degree videos and VR games is driving the growth of the VR segment of the market. The year 2020 saw an increase in VR adoption with the launch of many new VR devices such as Sony PlayStation VR, HTC VIVE Cosmos, and Oculus Quest 2. Providers use specialized sensors, software, and 3D sound to deliver immersive VR experiences to users. Growth in VR content is driven by rising sales of popular head-mounted displays (HMDs) such as the Samsung Gear VR and Google Cardboard.
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The VR segment was valued at USD 11.89 billion in 2017 and continued to grow until 2021. VR is widely used not only in medical institutions but also in the military and aviation sectors for the education and training of students and trainees. It gives trainees hands-on experience with the subject matter. Many companies partner and merge with other companies to share hardware and software technology. The VR gaming hardware segment is likely to experience high growth during the forecast period. A VR device is a dedicated headset with an integrated display that works with a PC, game console, or mobile device. VR content uses specialized sensors, software, and 3D sound to provide users with an immersive virtual experience. The growth of the market is fueled by rising sales of popular HMDs such as Oculus Rift, Google Cardboard, and HTC VIVE.
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North America is estimated to contribute 37% to the growth of the global extended reality market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The high demand for augmented reality is due to the widespread adoption of AR and VR technologies in various industries such as retail, healthcare, e-commerce, and automotive in North America. Mobile devices such as tablets and smartphones with built-in AR capabilities are ubiquitous in the region. The presence of major vendors, increasing investment in AR technology by major vendors, growing consumer acceptance of technologically advanced applications, and strong research efforts to increase the applications of AR and VR technologies have been repatriated. This is attributed to the high share of China's market. North America. Therefore, AR has become an important tool for smooth business operations and operations, expanding the scale of the AR advertising industry. With the rapid growth of digital reality, AR is widely used to add visual effects to product promotions. The region has retailers such as Coca-Cola, Disney, Ford, Kraft Foods, Maybelline, Nickelodeon, Pepsi, and Walmart using AR technology in their advertising. The United States is a key country in the region owing to the presence of major players such as Google, Facebook, Microsoft, and Qualcomm.
COVID-19 had a mixed impact on the market in 2020. Government lockdowns across the world drove a shift to remote work and remote learning. This increased the demand for extended reality( XR) technology in those industries. For example, virtual classrooms and distance learning using VR and AR are growing in popularity. Additionally, with the pandemic shutting down brick-and-mortar stores, 2020 saw an increase in the adoption of AR and VR for e-commerce and retail applications across the world. However, in 2021, a massive vaccination campaign restarted some business and industrial activities, increasing the demand for XR. Increasing demand for AR and VR in organizations for training and development, along with increased investment in immersive technology across multiple industries, is expected to boost the growth of the market during the forecast period.
The extended reality market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the global extended reality (XR) market as a part of the global application software market within the global IT software market. The overall global IT software market includes companies involved in the development and manufacturing of application and system software. This includes companies that provide database management software. The global application software market includes companies involved in developing and manufacturing software designed for specialized applications for the business or consumer markets. This includes enterprise and technical software as well as cloud-based software.
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Extended Reality Market Scope |
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Report Coverage |
Details |
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Page number |
173 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 43.09% |
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Market growth 2023-2027 |
USD 421.42 billion |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
40.15 |
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Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
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Performing market contribution |
North America at 37% |
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Key countries |
US, China, Japan, Germany, and UK |
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Competitive landscape |
Leading vendors, market positioning of vendors, competitive strategies, and industry risks |
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Key companies profiled |
3D Systems Corp., ABB Ltd., Accenture Plc, Alphabet Inc., Canon Inc., HTC Corp., Intel Corp., Lenovo Group Ltd., Magic Leap Inc., Meta Platforms Inc., Microsoft Corp., NVIDIA Corp., PTC Inc., Qualcomm Inc., Roper Technologies Inc., Seiko Epson Corp., SoftServe Inc., Sony Group Corp., Tata Sons Pvt. Ltd., and VertexPlus Softwares Pvt. Ltd. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Component
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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