Extended Reality (XR) Market Research Report: By Component (Hardware, Software, Services), Device Type (Mobile, Personal Computer, Headset), User (Single-User, Multi-User), Delivery Model (Consumer Engagement, Business Engagement), Application (Virtual Reality, Augmented Reality, Mixed Reality), Industry (Retail, Education, Industrial & Manufacturing, Healthcare, Media & Entertainment, Gaming, Aerospace & Defense) - Global Industry Analysis and Growth Forecast to 2030

Market Outlook

The extended reality (XR) market size was $18.6 billion in 2019, and it is projected to showcase a CAGR of 48.3% during 2020–2030. The major factors behind this growth include the surging adoption of 5G, AR/VR, smartphones, and connected devices, soaring number of collaborations and partnerships, and mounting focus on gesture-based computing.

COVID-19 Impact Analysis

The ongoing COVID-19 pandemic has boosted the requirement for the XR technology due to the increasing need for virtual meetings and training. This is because of the partial or complete lockdowns, which have compelled the employees of various organizations to work from home. However, the shutdown of manufacturing plants and disruptions in the supply chain have halted the production and supply of XR devices across the globe. Moreover, the reduced consumer expenditure on non-essential items will have a negative impact on the extended reality industry throughout 2021.

Hardware Held Major Market Share

The hardware category accounted for the largest market share, under the component segment, in 2019. This was due to the decreasing cost of hardware components, including sensors, cameras, piston trackers, and displays, and increasing penetration of smart devices. Additionally, the extended reality market also witnessed the launch of untethered VR/AR devices, including Lenovo Mirage Solo, Oculus Go, and HTC Vive Focus.

Mobile Devices To Record Fastest Growth

In 2019, the mobile category contributed the highest revenue to the market for extended reality solutions, based on device type, and it is expected to be the fastest-growing category in the near future. This can be attributed to the growing adoption of smartphones and their rising usage for AR/VR applications.

Multi-User To be Faster-Growing Category

In 2019, the single-user category generated the higher revenue; the multi-user category is projected to observe the faster growth in the years to come. The growth of the multi-user category can be owed to the increasing adoption of multi-user AR and VR devices in the manufacturing, retail, education, media & entertainment, and aerospace & defense sectors, for training and educational purposes.

Business Engagement Delivery Model Was Most Fruitful

The business engagement category, within the delivery model segment, accounted for the larger share in 2019. This can be ascribed to the accelerating adoption of immersive technologies for employee training and development purposes. Additionally, the growing reliance on XR technologies to solve business issues and create innovative solutions, to meet the requirements of clients, will drive the growth of this extended reality market category in the near future.

AR Category Generated Highest Revenue

In 2019, the AR application category held the largest share in the market for extended reality solutions, primarily on account of the high demand for AR applications and devices in the retail, e-commerce, and healthcare industries. In addition, the rising investments in AR technology advancements and spurring demand for this technology among individuals are contributing to the category growth.

Gaming Industry To Record Fastest Growth

The gaming category, within the industry segment. is expected to witness the fastest growth between 2020 and 2030. This will be due to the increasing integration of immersive technologies in the gaming sector and augmenting investments by the key players. For instance, in February 2020, Facebook Technologies LLC, a subsidiary of Facebook Inc., acquired Sanzaru Games Inc. to widen its VR gaming portfolio. Moreover, the booming demand for games in the Middle East & Africa (MEA) and Latin American (LATAM) regions would fuel the category growth in the near future.

North America Is Largest Contributor to Market Revenue

The North American region generated the highest revenue in 2019 due to the presence of key market players and rapid penetration of XR solutions. Moreover, the growing focus on AR and VR solutions in the education and aerospace & defense industries will fuel the extended reality market advance in North America. For instance, in 2018, the Office of Special Education Programs (OSEP), under the U.S. Department of Education, announced its plans to invest $2.5 million in a program that would nurture social skills in specially abled students via the use of VR.

Asia-Pacific (APAC) To Demonstrate Fastest Growth

APAC will witness the fastest growth in the coming years due to the increasing proliferation of AR/VR mobile applications and rising usage of immersive technologies for media & entertainment, gaming, and other purposes. Additionally, the mounting expenditure on immersive technologies for development and training purposes will support the market growth in APAC. As per a 2019 report published by the Infocomm Media Development Authority (IMDA) of Singapore, the spending on AR/VR technology in the APAC region (excluding Japan) increased by nearly 100%, to jump to $11.1 billion in 2018 from $4.6 billion in 2017.

Increasing Usage of 5G Solutions Is Key Market Trend

The growing adoption of 5G services is one of the key contributors to the extended reality market revenue. XR solutions have more-complex network requirements, such as a high bandwidth, high reliability, and low latency, which can be provided by 5G at an affordable cost. Thus, the industry is thriving on the surging adoption of 5G connections and rising shipments of phones that support this telecommunications technology.

Spurring Adoption of Smartphones and Connected Devices Supporting Market Growth

The usage of XR solutions is increasing due to the wide-scale adoption of smartphones and connected devices. In essence, the amplifying use of AR applications on these devices is acting as a facilitator for the market growth worldwide. In March 2020, the GSM Association published a report that stated that there were 5.2 billion unique mobile subscribers in December 2019, and the number is estimated to reach 5.8 billion by 2025. In 2019, these subscribers accounted for nearly 67% of the global population, and by 2025, they will account for approximately 70% of the total population.

Growing Collaborations among Market Players Facilitating Market Growth

The number of partnerships and collaborations among leading players has surged in recent years. These collaborations in the extended reality market are aimed at expanding the user base of the XR technology in several industries, such as hospitality, education, and retail. For instance, Qualcomm Incorporated and Accenture plc collaborated with InterContinental Hotels Group in January 2020 to pilot-run a solution that uses AR and VR to enhance the event planning experience. Accenture plc’s XR Event Planner solution brings buyers, event planners, and the hotel sales staff on a common virtual platform, to enable them to remotely configure and envision the layout in real time.

Increasing Adoption of AR/VR Solutions Boosting Market Size

The escalating usage of the AV and VR technologies by enterprises and the general public is another growth driver for the market. The rising adoption of head-mounted displays (HMDs) among individuals for education and knowledge purposes and among businesses for offering a more-interactive and -engaging customer experience has amplified the requirement for AR and VR solutions, globally.

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Mergers & Acquisitions Helping Companies Increase Their Revenue

The extended reality market is fragmented in nature, owing to the presence of a large number of market players, such as Qualcomm Incorporated, Accenture plc, Adobe Inc., Unity Technologies, and Microsoft Corporation. In recent years, various companies in the extended reality market have adopted mergers & acquisitions as a key strategy, in a bid to increase their market share. For instance:

• In June 2020, Alphabet Inc. acquired North Inc., a smart glass startup, to quicken the development of AR/VR devices. The latter now operates from Alphabet Inc.’s offices in Ontario, Canada.
• In March 2020, Semcon AB acquired Xtractor Interactive AB, to strengthen its position in the digital product information domain, to enhance its expertise in the production of interactive web and mobile training solutions, along with offering learning management systems (LMS) to its clients worldwide.
• In February 2018, Accenture plc acquired Germany-based Mackevision Medien Design GmbH Stuttgart, to strengthen its interactive content practice model via the addition of the latter’s animation, visual effects, and 3D visualization capabilities. With this acquisition, Accenture plc also aimed at accelerating its ability to create, envision, and operate XR solutions at scale.

Some of the key players in the global extended reality market report include:

Extended Reality Market Size Breakdown by Segment

The extended reality market report offers comprehensive market segmentation analysis along with market estimation for the period 2014–2030.

Based on Component

• Hardware
• Software
• Services

Based on Device Type

• Mobile
• Personal Computer (PC)
• Headset

Based on User

• Single-User
• Multi-User

Based on Delivery Model

• Consumer Engagement
• Business Engagement

Based on Application

• Virtual Reality (VR)
• Augmented Reality (AR)
• Mixed Reality (MR)

Based on Industry

• Retail
• Education
• Industrial & Manufacturing
• Healthcare
• Media & Entertainment
• Gaming
• Aerospace & Defense

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • France
  • U.K.
  • Italy
  • Spain
• Asia-Pacific (APAC)
  • Japan
  • China
  • India
  • Australia
  • South Korea
• Latin America (LATAM)
  • Brazil
  • Mexico
• Middle East and Africa (MEA)
  • U.A.E.
  • South Africa