Augmented and Virtual Reality Market Size, Share and Growth

Updated on : October 22, 2024

Augmented and Virtual Reality Market Size & Growth

The Augmented Reality and Virtual Reality Market size was valued at USD 22.12 billion in 2024 and is expected to reach USD $96.32 billion by 2029, growing at a CAGR of 34.2% during the forecast period 2024 to 2029.

Rapid growth of AR and VR applications in the gaming and entertainment industry are the major drivers of the augmented and virtual reality market. This is attributed to AR delivering uncommon combination that refashions how people relate with the digital content and VR enhancing the performance, compactness, and comfort such as Apple Vision Pro, Meta Quest 3. Furthermore, the growing implementation of government initiatives and investments towards AR and VR technologies provides growth opportunities in the augmented reality and virtual reality market. For instance, In September 2023, a UK-based holographic company Envisics, that manufactures in-car technology that projects navigation and safety alerts on the windscreen rose to USD 100 million in its Series C round is expected to help AR head-up displays reach commercialization over the forecast period.

Augmented and Virtual Reality Market Trends:

Impact of AI/Gen AI on augmented reality and virtual reality market

The major use cases of AI/Gen AI in the augmented and virtual reality market includes content creation, object recognition and tracking, user interaction, intelligent virtual assistants and spatial mapping. AI-enhanced content creation empowers the fast and easy generation of quality assets, environments, and interactions that provide more immersive and dynamic AR and VR experiences. AI-driven object recognition and tracking boost interactivity and realism several-fold by ensuring that virtual elements fit well into the real world—key to gaming, training, and industrial applications. Besides, AI enhances user interaction with intuitive and responsive interaction through natural language processing, gesture recognition, and adaptive interfaces that give better user engagement. Other benefits are AI-powered virtual assistants that can provide personalized aid and learn; however, their full potential is again limited because of technological and integrational challenges. Finally, spatial mapping enhanced by AI is required in the development of most immersive AR and VR experiences, since it accurately perceives and reconstructs physical environments; in this regard, spatial awareness drives applications like navigation, gaming, and training.

Attractive Opportunities in Augmented Reality Market Size

Augmented and Virtual Reality Market Forecast to 2029

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Augmented and Virtual Reality Market Dynamics

Driver: Rapid growth of AR and VR applications in the gaming and entertainment industry

Demand for AR has been ever-increasing within the gaming and entertainment market simply because of its ability to alter a user's experience in extraordinary ways. AR puts together the uncommon combination of immersion and interactivity that refashions how people relate with digital content. On the gaming front, AR is creating worlds that merge the real and the virtual, urging players to explore their surroundings and collaborate with others in becoming part of the game. It physicalizes gameplay and encourages an active physical lifestyle and fosters the solving of problems.

VR technology has been gaining momentum lately in the gaming industry. By several key factors such as hardware improvements. In the hardware for VR gaming today, people have witnessed improved performance, compactness, and comfort in products like Apple Vision Pro and the ensuing Meta Quest 3. Improvements in display technology, increased resolution, better visuals, and spatial stability add up to enhance the overall immersive experience for gamers. Hence, their rapid growth in AR and VR applications in the gaming and entertainment industry drives market growth for augmented and virtual reality technologies.

Restraint: Presence of privacy infringement and technological constraints

The rapid evolution of AR technology has launched a wave of creative applications and experiences. These result in enhanced interactions between the digital and physical worlds in exciting ways, which give rise to critical concerns about potential security and privacy issues. AR technology often lays digital information over the top real world, mingling new routes of data collection and sharing. As digital elements become gradually aware of, and augment physical environments, there is an increased likelihood  of collecting personal data such as location information, images, as well as behavioral patterns. This information is applied in creating elaborate profiles for each person, hence raising concerns about its gathering, retention, and exploitation, thereby limiting the expansion of the AR technology market being bounded.

Viewers generally experience a 90-degree viewing angle when using VR devices which is significantly narrower as compared to the natural FOV of a human being, which is approximately 190 degrees horizontal and 120 degrees, oriented perpendicular to one another. Such misalignment reduced the level of immersion that VR experiences can bring about, as users are left with a feeling of limited peripheral vision compared to the actual perception existing in the real world. Hence, technological constraints are limitation factors to the growth of VR.

Opportunity: Growing implementation of government initiatives and investments

Governments across the world are inducing the development of the AR market with their support in terms of AR funding, R&D support, startup grants, and partnership with academic institutes. For instance, In September 2023, a UK-based holographic company Envisics, that manufactures in-car technology that projects navigation, safety alerts onto the windscreen rose USD 100 million in its Series C round is projected to commercialize AR head-up displays during the forecast period. Furthermore, in August 2023, companies like Snapchat launched the reward lens creator program with AR creators and developers in order to monetize their top-performing lenses. If an AR lens creator's invention achieves high engagement in countries such as the United States, India, or Mexico, they could potentially earn up to USD 7,200 per month. Such developments fuels the awareness of AR market which thereby drives the market growth of AR in the future.

The current period witnesses huge investment in the VR market for the reason that the endowment in this technology which is potentially leading in introducing transformation in several industries. The investment infusion indicates the increasing acceptance of the capability of VR to redesign digital interacting, learning, communicating, and experiential landscapes. Evidently, the numerous applications under VR attract investors to from billing games, entertainment, to healthcare, education and finance.

Challenge:  Lack of flexibility and technical issues in various AR VR products

The lack of flexibility within the different AR platforms rises deep concern over the development of such AR technology. Compatibility issues arise as the key problem because most AR platforms often have their proprietary hardware and software; hence, they make it hard to create content for an all-in-one system with interchangeable parts. In addition, development of cross-platform AR applications is complicated and time-consuming; again, it often necessitates that several versions are made or that specialized tools be used, which will multiply development costs and delay time-to-market, which will in turn hinder the growth of the AR technology market.

Key technical limitations with the VR market are related to display resolution and haptic feedback and optimal user engagement. Attaining a very high level of visual fidelity that is comparable to the complexity of human vision is very important, and the role played by visual resolution is critical. While improvements are made, and fine details are still difficult to reproduce accurately, giving rise relatively frequently to artifacts such as "screen door effect" where a visible pixel grid detracts from immersion and blurs the distinction along the line, between the digital and the physical. Therefore, the presence of technical problems dampens the market appeal of the VR technology

Augmented and Virtual Reality Market Ecosystem

The prominent players in the augmented and virtual reality market are Meta. (US), Sony Group Corporation (Japan), Apple, Inc. (US), ByteDance (China), and DPVR (China). These companies perform organic and inorganic growth strategies to expand themselves globally by providing advanced augmented and virtual reality products.

Augmented and Virtual Reality Market Segmentation

AR head-mounted displays (HMDs) and VR gesture tracking devices are expected to witness the highest CAGR in the augmented and virtual reality market during the forecast period

AR head-mounted displays (HMDs) are expected to witness the highest CAGR in the augmented reality market during the forecast period. This is attributed to the accelerating adoption of AR HMDs in consumer, and aerospace and defense applications. In consumer applications AR HMDs are highly used in gaming, sports, and entertainment sector. They help rogue pilots in the air force and navy personnel to clearly view and aim at enemy operations more accurately. The other segment involved in this category is the AR smart eyewear segment. It is gaining the interest of enterprises and healthcare, retail, automotive and consumer segments. Major industry players, which include Osterhout Design Group (UK), Epson, Google, Magic Leap, Vuzix, and Solos (UK) are committed to the hype of augmented reality smart whereas in the case of the virtual reality hardware consumer ones, the crucial hardware device in the virtual reality domain is the VR gesture tracking device. The VR gesture tracking device will render the user immersed. So naturally, the demand for the gesture tracking devices will soar in the virtual reality industry.

Enterprise and consumer applications is expected to have the largest market size in augmented and virtual reality market, respectively, during the forecast period

The enterprise application segment was predicted to lead the market for AR during the forecasting period in terms of market size. Factors driving growth in these segments include an increasing need to improve training methodologies by a reduction in human errors and by optimizing efficiency. Further, the addition of AR has revolutionized training methodologies by giving trainers increased visibility and hence conforms to the industry 4.0 trend. Additionally, there is high demand in the entertainment sector for developing VR applications to enhance user experiences in sports broadcasting and gather information through social networking sites. Therefore, the demand for VR technology in consumer applications is expected to have the largest market size during the forecast period.

Augmented and Virtual Reality Industry Regional Analysis

Asia Pacific region is expected to witness the highest CAGR in the augmented and virtual reality market during forecast period

Asia Pacific is expected to witness the highest CAGR in the augmented and virtual reality industry during the forecast period, primarily due to the factors such as widespread use of smartphones, increased adoption of smart electronic devices, rising demand for AR technology in healthcare applications, presence of numerous key players in the region such as Sony Group Corporation, ByteDance, DPVR among others, and availability of cost-effective VR products from local manufacturers, especially in China. Therefore, Asia Pacific is expected to witness the highest CAGR during the forecast period.

Augmented and Virtual Reality Market by Region

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Top Augmented and Virtual Reality Companies - Key Market Players

The major players in the augmented and virtual reality companies include

• Meta. (US), 
• Sony Group Corporation (Japan), 
• Apple, Inc. (US), 
• ByteDance (China),
• DPVR (China)

These companies have used both organic and inorganic growth strategies such as product launches, product development, partnerships, collaborations, contracts, joint investments, strategic supplier relationships, and expansions to strengthen their position in the market.

Augmented and Virtual Reality Market Report Scope

Augmented and Virtual Reality Market Highlights

The study segments the augmented reality and virtual reality market based on technology, offering, device type, application, and region at the regional and global level.

Recent Developments in Augmented and Virtual Reality Industry

• In June, 2024, Apple Inc. launched vision OS 2 which provided new spatial computing experiences to Vision Pro. Through this the user can turn their photos into spatial photos, gestures for navigating visionOS and many more ways to take advantage of spatial computing.
• In June 2024, Google formed a collaboration with the artist Grand Palais Immersif’s recent exhibition “Loading: Urban Art in the Digital Age Exhibition” which is an immersive exhibition that portrays the history of urban art and sheds light on the impact of digital technologies.
• In May 2024, Alo Moves and Meta formed a partnership that will features 3D classes for a new level of immersion. Under this partnership, Alo Moves will utilize Meta Quest 3 in the same rooms as the instructors for classes spanning yoga, Pilates and meditation.
• In April 2024, Meta. And EssilorLuxottica formed a partnership to produce second-generation smart glasses which expands the Ray-Ban Meta smart glasses collection. It includes additional features such as updates to Meta AI that will make the glasses more useful.
• In January 2024, Sony Group Corporation developed an immersive spatial content creation system which includes XR HMD which delivers high quality 4K OLED microdisplays, video see through functions and a pair of controllers that are used for intuitive interaction with 3D objects and precise pointing.

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