Augmented (AR) and virtual reality (VR) have moved rapidly from niche concepts to one of the most hyped emerging technologies expected to become mainstream in the coming years.
Both AR and VR aim to enhance our engagement with the world around us. AR overlays digital information onto our real-world environments while VR transports us to digitally simulated ones.
After years of incremental progress, AR/VR technologies appear poised for much more rapid adoption thanks to major tech improvements, expanding use cases beyond just gaming and entertainment, and heavy investment from major players like Meta, Apple, Google, and Microsoft.
This article will dive into the latest market data, statistics, and trends demonstrating the growth trajectory for augmented and virtual reality.
Total Global AR/VR Market Size and Growth Projections
Recent forecasts predict strong growth ahead for the combined global AR and VR markets.
According to market research firm IDC, worldwide spending on AR/VR is projected to accelerate rapidly from $12 billion in 2020 to over $72 billion by 2024 representing a 5-year compound annual growth rate of 54%.
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Driving this bullish view is the expectation that both hardware and software capabilities will improve substantially while component costs decline allowing for more approachable consumer price points for devices in coming years.
Network connectivity is also getting an upgrade through newly deployed 5G infrastructure which will help enable more advanced real-time AR/VR experiences.
Breakdown Between AR vs VR Market Size
When assessing the overall industry, it’s important to distinguish between the AR and VR subsets which have a few key differences in their growth trajectories and addressable markets.
Global tech market advisory firm ABI Research forecasts that the VR hardware and software market will grow to $24.5 billion by 2024 representing about a third of the total AR/VR pie. This includes revenue from enterprise solutions and the consumer gaming market.
The market for augmented reality solutions is expected to outpace VR substantially reaching $48.2 billion by 2024 per ABI‘s forecast.
The bigger growth runway for AR stems from its ability to overlay digital information and objects onto real-world environments rather than fully simulated ones. This provides more versatile practical applications for shopping, navigation, industrial work, and healthcare use cases.
For example, furniture brands like IKEA, Wayfair, and Amazon are investing heavily in AR apps that let you visualize products in your living space. Healthcare startups are exploring AR-assisted surgery while industrial workers can access hands-free information via AR glasses and headsets.
These expanded use cases for augmented reality open up a much wider addressable market compared to the heavier processing demands required for satisfying virtual reality experiences. While the experiences aren’t as immersive, the lighter capabilities required by AR lend better to mobility and practical everyday uses.
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Market Share Breakdown Between Major Players
The AR/VR marketplace is still very fragmented with a variety of players jostling for position as top providers for hardware and software capabilities.
|| Meta | Apple | Sony | Google | Others |
|-|-|-|-|-|-|
| Market Share | 26% | 22% | 13% | 12% | 27% |
Facebook parent company Meta (previously known as Oculus) currently leads pure-play virtual reality providers thanks to its popular Oculus headsets and Quest application store ecosystem.
But many expect adoption for Apple’s rumored AR/VR wearable device coming over the next 1-2 years to accelerate thanks to the company’s design prowess and ability to integrate the experience with their iPhone and Mac ecosystem.
Sony remains dedicated to advancing VR gaming capabilities through continued innovation of its PlayStation VR headsets.
Google maintains a strong AR software suite for Android mobile devices via ARCore and has invested over $1.1 billion in AR/VR startups while recently launching an in-house AR team.
There are also a number of other players from both tech startups and incumbent enterprise vendors contributing hardware and software tools used to build and experience AR/VR applications.
So while Meta currently leads in market share, expect the competitive landscape to remain fluid as multiple players vie for AR/VR platform dominance over the next several years.
Consumer Adoption and Demographics
How many people are actually using AR and VR devices today? And what segments are the most enthusiastic adopters?
Per research firm Insider Intelligence, there will be 171 million active users of AR/VR technologies globally by the end of 2022. They forecast this to grow to 264 million active users by 2025.
Diving deeper into current adoption – video games and entertainment remains the most common use for AR/VR hardware.
Around 40% of VR headsets currently in use are operated by users between 25 and 34 years old. While about 75% of headsets are used by men more so than women at this stage.
Geographically, adoption remains strongest in Asia-Pacific countries like China, Taiwan, Japan, and South Korea – making up over 50% of headsets in use due to the popularity of VR based arcade gaming centers in those regions.
But North America and select European countries are catching up as more affordable in-home VR hardware options from Sony, Meta/Oculus, and others help drive increased mainstream consumer adoption in Western markets.
Smartphones remain the most ubiquitous and adopted AR capable hardware globally thanks to embedded sensors and software kits like Apple’s ARKit and Google’s ARCore which enable phone cameras to deliver augmented reality experiences.
Dedicated AR headsets and glasses remain minimal today but may represent the bigger opportunity once form factors, software capabilities, and cellular connectivity improve over the next 2-5 years.
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Retail Poised to Lead VR/AR Adoption By Industry
Virtual and augmented reality will steadily make inroads into a variety of industry verticals as software and hardware improves – with retail, gaming, and healthcare leading the way in the near-term.
Per market research firm Gartner, the top industries targeted for AR application adoption over the next year based on their recent survey include:
|| Industry | Planned AR Adoption |
|-|-|-|
| 1. | Retail | 53% |
| 2. | Education | 47% |
| 3. | Consumer | 44% |
| 4. | Manufacturing | 42% |
| 5. | Healthcare | 36% |
Let’s explore the growth opportunities and potential from VR/AR technology for some of these key industries:
Retail
Retailers continue to be especially bullish on augmented reality for enhancing mobile shopping, bridging in-store and online experiences, aiding product visualization, and assisting store layout planning activities.
Per findings from Forrester Research, over 60% of retailers are currently piloting or planning for AR deployment over the next year.
IKEA’s mobile Place app which lets you preview true-to-scale 3D models of furniture in your living space remains one of the most downloaded and beloved examples of augmented reality from a consumer perspective.
Shopify also offers native AR capabilities allowing its merchant sellers to demo products through a smartphone camera – opening up the technology for smaller brands.
Overall, market research firm Gartner forecasts that 100 million shoppers will be using AR-enabled mobile apps while shopping by 2022.
Similar to AR – virtual reality also shows promise for usage in retail environments particularly for training personnel, designing store layouts, and collecting consumer shopping behavior insights.
As the tools for creating simulated retail experiences improve – more brands seem poised to take advantage for prototyping concepts and gaining applied consumer feedback.
Gaming
Gaming remains the most popular category for virtual reality headsets – making up over 30% of headset volumes according to recent IDC forecast data.
Sony has sold over 5 million units of its PlayStation VR headset globally since its launch in 2016. While over 10 million Oculus Quest headsets are in use as of 2022 per Meta metrics – with gaming representing one of the most common applications.
Thanks to growing enthusiasm from indie game developers combined with pipelines for easily porting flat game environments into 360 degree VR ones – IDC expects the VR gaming hardware market alone to generate over $3 billion in global revenue by the end of 2022.
Cloud-streaming game services could provide a big boost by allowing VR games to be instantly accessible across devices without consumers needing to invest in expensive equipment for processing intensive experiences.
Major gaming developments in VR over the next 2 years will likely support continued momentum.
Healthcare
The application for AR/VR technology for improving healthcare outcomes offers enormous life-changing potential – especially as visualization and simulation capabilities improve.
Per research from Global Market Insights, the VR healthcare market alone is slated to grow at a CAGR of 31% from 2022-2030 – reaching over $33 billion in value.
Some examples of high-impact areas for AR & VR healthcare include:
- Assisting surgeons via 3D visualization overlays on patients during complex procedures
- VR simulations for accelerated medical training & education
- VR exposure therapy to treat phobias, anxiety, PTSD
- AR-guided real-time support for field medical emergencies
- Visualizing anatomical structures in AR during diagnosis
As systems and software grow more intuitive and capabilities more realistic – healthcare is set to be one of the transformative industries to leverage immersive technologies.
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Regional Market Analysis
While the Americas currently lead in total AR/VR spending – the Asia Pacific region led by China is forecast to grow at the fastest rate of 65% CAGR through 2024.
North America
Total North American AR/VR market revenues to reach $40.4 billion by 2024 per IDC forecasts – representing the largest global share on the backs of the US and Canada serving as major development hubs for software and hardware innovation by both startups and larger tech companies with AR/VR initiatives.
Hardware purchasing remains strong amongst early adopter consumer segments while enterprise adoption sees further expansion as more hands-on use cases develop across medical, manufacturing, retail industries in the region.
Asia Pacific
Fueled especially by enthusiasm in China along with Japan and South Korea – Asia Pacific spending on AR/VR expected to reach $29.1 billion by 2024 reflecting a 65.1% CAGR from 2020.
The region has a rabid appetite for experiential VR gaming centers while smartphone AR utility continues to grow. 5G infrastructure investment and declining hardware costs in China also set table for mass consumer adoption in coming years.
Europe
Europe’s AR/VR market presently sits at half the size of North America’s approximately. But strong growth in Western European industrial hubs is contributing to 2024 forecasted revenues of $15.3 billion – buoyed by firms in Germany, Finland, and others at forefront of VR hardware and software development.
Healthcare solutions and VR gaming revenue help round out the solid if not spectacular growth projections for Europe.
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VR Headset Shipment Volumes
Shipments of dedicated VR headsets grew by 92% year-over-year from 2020 to 2021 – reflecting strong pandemic fueled interest in virtually engaging with digital environments.
According to IDC, vendors shipped nearly 15 million VR and AR headsets globally in 2021. While growth is slowing from its breakneck pandemic paces – strong continued expansion is expected in subsequent years.
Their data shows the market surpassing 21 million shipments in 2022 led by Meta Quest 2 volumes along with growth from Pico, DPVR, and HTC. By 2026, total shipments expected to double again to over 47 million units annually.
Standalone all-in-one VR headset units outpace their tethered counterparts requiring a connected PC or gaming console at a nearly 5:1 ratio. Thanks to the expanding capabilities of mobile processors powering experiences completely within a headset – eliminating cumbersome wires found in earlier generations.
Facebook’s Oculus Quest 2 stands as the premier example of this standalone category – with its wireless form factor and starting $299 entry price down from $399 after the 2021 introduction contributing heavily to mass adoption.
Competitor devices from brands like HTC, Pico, and Sony however help round out a diversifying market for both consumers and enterprises.
As more compelling headsets reach sub-$500 price points over the next 12-18 months – IDC forecasts strong continued growth for global shipments. Particularly as Apple enters the fray with its anticipated AR/VR wearable that may ultimately provide VR-like immersion.
Include charts detailing VR headset shipment growth globally as well as breakdowns by tethered vs standalone
The Future is Bright (and Augmented)
Despite the inflated expectations and subsequent fizzle cycles of overhyped tech trends – this time the steady momentum across software developments, expanding applications, and improved hardware seem poised to enable AR adoption reaching critical mass.
Smartphone AR utility will help power mass familiarity with augmented reality – allowing more consumers to visualize the art of the possible for wearables, glasses, and headsets down the road as form factors shrink and connectivity bolsters real-time enhancements.
While AR spans the greater total addressable market – continued strong innovation and sales from key VR ecosystem players ensures steady footing for virtual reality to blossom in gaming and critical enterprise use cases in coming years.
Advancements with Apple’s rumored headset could likewise expand the VR appeal significantly thanks to their track record of delivering category-defining user experiences supported by an enormous existing install base already comfortable with their products and iOS ecosystem.
In closing, analysts and experts across the board continue highlighting 2022 as a real inflection point with AR/VR technologies moving from early adopter niches into the mainstream.
This year may mark when both augmented and virtual reality transition from ambitious “moonshots” to practical everyday enhancements – ushering in a new era of spatial computing.
Exciting times ahead…buckle up!
