Extended Reality Market Size, Share & Growth

Updated on : October 22, 2024

The Global Extended reality market size is experiencing unprecedented growth, driven by rising demand across various sectors such as entertainment, healthcare, education, and retail. As organizations increasingly recognize the value of immersive experiences, the future of XR looks promising, with new technologies like augmented reality (AR), virtual reality (VR), and mixed reality (MR) leading the charge. Key trends shaping this market include advancements in hardware, such as more powerful headsets and haptic feedback devices, as well as software innovations that enhance user engagement and interactivity. With an expanding ecosystem of applications and a growing user base, the extended reality market is poised for remarkable expansion in the coming years.

Extended Reality Market Size 

The extended reality market size is projected to reach USD 111.5 billion by 2028 from USD 40.1 billion in 2023, Growing at a CAGR of 22.7% from 2023 to 2028. Increasing adoption of extended reality in the education sector and industrial training, continuous developments in 5G technology, and advancements in display technology such as increasing usage of OLEDoS in HMDs are some of the major factors driving the market growth globally. Moreover, mixed reality (MR) technology will have a significant positive impact on the extended reality market since it can seamlessly merge digital and physical surroundings, transforming user experience across many applications.

Extended Reality Market Size &  Forecast to 2028

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Impact of AI/Gen AI on Extended Reality Market

The major use cases of Al/Gen Al in the extended reality industry includes content creation, object recognition and tracking, user interaction, intelligent virtual assistants, and spatial mapping. Al- 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. Al-driven object recognition and tracking boost interactivity and realism several-fold by ensuring that virtual elements fit well into the real world-key in gaming, training, and industrial applications. Besides, Al 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 Al-powered virtual assistants that can provide personalized aid; however, their full potential is again limited because of technological and integrational challenges. Finally, spatial mapping enhanced by Al is required in the development of most immersive AR and VR experiences, since it accurately perceives and reconstructs physical environments. This spatial awareness is essential for applications like navigation, gaming, and training, enabling XR systems to effectively interact with and respond to the physical world.

Extended Reality Market Trends & Dynamics

Driver: Increasing demand for extended reality in the entertainment and gaming industry

The gaming and entertainment sector has witnessed significant growth as a result of its increased adoption of extended reality technologies. Several companies in the industry, such as Meta and Sony Group Corporation, are developing XR-based entertainment content such as games, films, videos, and other media. The ability of extended reality devices to produce realistic-looking virtual scenarios and operate as natural user interfaces, along with the capability of 6-degree flexibility, are the main drivers behind the adoption of this technology and the enhancement of end users' overall gaming experiences. XR-based gaming gaining traction, with several developers creating games exclusively for XR devices. For example, in February 2023, Sony Group Corporation released PlayStation VR 2. When the user approaches an object or wall, the headset scans their surroundings and alerts them with a warning. The mapped area can be adjusted by the user using the Sense controllers. In addition, the floor limits can be raised or lowered in case the automatic mapping is incorrect. Two video modes are available for selection in the new headset - VR mode, which provides games with resolutions of up to 4000 x 2040 pixels (2000 x 2040 per eye), HDR, and a refresh rate of 120Hz, or cinematic mode for media viewing in a personal virtual theatre experience.

Restraint: High installation and maintenance costs of extended reality devices

Extended reality technology combines AR, VR, and MR. Extended reality devices use 3D and other modern technology to create a virtual environment that appears realistic. They include advanced and expensive gears and software. In addition, installing extended reality devices and solutions incurs additional costs. The overall cost needed to implement this technology is increased due to their maintenance costs. The total cost is increased since businesses frequently have to pay for specific training in order for employees to properly maintain and use this technology.

Opportunity: Adoption of extended reality in automotive and enterprise to create opportunities for market players

The entire value chain of the extended reality market -from product development and research & development to manufacturing, marketing, and after-sales-has been entirely transformed by extended reality applications. Numerous automobile manufacturers employ virtual reality-driven prototyping systems that allow them to identify and rectify conception-related mistakes on prototypes relatively early on. Consequently, increased manufacturing unit productivity leads to lower production costs and the development of higher-quality products. For example, instead of making expensive physical models at different stages of their product development process, Ford Motors uses virtual prototyping technology.

Extended reality technology is also used for providing training to staff by enabling them to be highly efficient, automated, and risk-free. Automotive giants such as Jaguar Land Rover (JLR) has started using extended reality technology to educate its employees. The technology allowed them to visualize internal data of JLR vehicles with individual components viewed from different angles on a tablet. This solution helped the company reduce the manufacturing costs, as well as enhance the efficiency and improve the quality of JLR vehicles. Also, these solutions can be used to showcase exterior accessories, carry out virtual test driving, and access virtual showrooms.

Challenge:  Display latency and limited field of view

The major concern faced by AR/VR/MR manufacturers is to provide a wide field of view (FOV). The field of view is defined as the extent of the observable world at any given moment. Ideally, a human eye has a visual field of ~200° horizontally and 135° vertically. Currently, AR and VR devices are able to provide a FOV of up to 90°. For AR devices to create immersive experiences, they must capture as much of the FOV as possible. A wide display can increase immersion and induce presence. But the problem with making wide FOV AR HUD with the existing projector-and-mirror technology is that it is huge. However, there have been substantial developments to cater to wide FOV with minimum space requirements. For instance, at CES 2019, RealMax Qian, a China-based company, showcased a wireless AR/VR headset with 100° FOV. Still, there is a long way to go, as many AR, VR, and MR manufacturers, such as Microsoft HoloLens and Magic Leap, are still struggling to offer a wide FOV.

Extended Reality Market Ecosystem

The prominent players in the extended reality market size are Microsoft (US), Sony Group Corporation (Japan), Meta (US), HTC Corporation (Taiwan), Google (US), PTC Inc. (US), Seiko Epson Corporation (Japan), Apple Inc. (US), Qualcomm Technologies, Inc. (US), and Samsung Electronics Co., Ltd. (South Korea). These companies not only boast a comprehensive product portfolio but also have a strong geographic footprint.

Extended Reality Market Share

By Offering, the software segment held the largest share of the extended reality market in 2023 

By Offering, the software segment held the largest market share of the extended reality market in 2023 and a similar trend is expected during the forecast period. This market growth can be ascribed to the increasing adoption of VR, AR, and MR in a wide range of applications. For example, retailers like Walmart and IKEA use AR/VR applications to improve their customers' shopping experiences. Furthermore, AR/VR gaming apps are growing in popularity, putting additional pressure on software vendors to provide complex and unique gaming applications. This is projected to help drive market expansion in the coming years.

Automotive application segment is expected to exhibit the fastest CAGR during the forecast period

Over the forecast period, the automotive application segment is anticipated to expand at the fastest CAGR. The growing emphasis of automobile manufacturers on improving the user experience is one of the major reasons of this expansion. The automotive industry trains their workers with XR solutions. For instance, Ford has built a virtual prototype lab, while Maruti Suzuki established a chain of simulation-based training centers throughout India. Additionally, automobile dealers use AR and VR technologies to let customers assess new automobiles' features without the need of physically being there.

Extended Reality (XR) Market Regional Analysis

North America dominated the extended reality market in 2023

In 2023, North America dominated the global extended reality market share. The major drivers behind the significant growth of the extended reality industry in this region include the growing utilization of smartphones, an increasing number of smart electronic devices as well as 5G technology deployment, and rising application of extended reality technology in several industries such as aerospace & defense and healthcare. For instance, according to Telefonaktiebolaget LM Ericsson, it is estimated that by 2028 North America will have reached over 90% in 5G subscription penetration rate – the highest compared to other parts of the globe.

Extended Reality Market size & by Region

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Extended Reality Companies : Top Key Players

The major players in the extended reality companies include

• Microsoft (US),
• Sony Group Corporation (Japan),
• Meta (US),
• HTC Corporation (Taiwan),
• Google (US), PTC (US),
• Seiko Epson Corporation (Japan),
• Apple Inc. (US),
• Qualcomm Technologies, Inc. (US),
• Samsung Electronics Co., Ltd. (South Korea),
• Intel Corporation (US),
• EON Reality (US),
• Xiaomi Corporation (China),
• Lenovo (Hong Kong), and
• Ultraleap (UK).

Extended Reality Market Report Scope :

Extended Reality Market Highlights

The study segments the extended reality market sizebased on technology, offering, device type, application, Trends and region at the regional and global level.

Recent Developments in Extended Reality Industry

• 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 feature 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 December 2023, DPVR and SchooVR, a company that offers immersive educational content entered into a partnership. This partnership between DPVR and SchooVR was aimed at improving instructional strategies for educators and learners by incorporating virtual reality (VR) into the classroom setting.
• In September 2023, DPVR launched P2, a PC-based immersive virtual reality headset. It is ideal for traffic use and helps FEC owners with revenue growth and business transformation due to its stereo speakers, longer detachable cord, and leather faceliner.
• In January 2023, HTC Corporation unveiled VIVE XR Elite, its next all-in-one consumer flagship. This small and light headset has numerous powerful and adaptable features that incorporate mixed reality (MR) and virtual reality (VR) technologies. It serves as an excellent option for different tasks like gaming, productivity, sports etc.

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