Augmented Reality and Virtual Reality Market to grow by USD 442.9 Billion (2024-2028), Rising Demand for AR and VR Tech Drives Growth, Report Highlights AI Impact - Technavio

NEW YORK, Jan. 27, 2025 /PRNewswire/ -- Report on how AI is redefining market landscape - The global augmented reality and virtual reality market size is estimated to grow by USD 442.9 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of  50.22%  during the forecast period. Growing demand for ar and vr technology is driving market growth, with a trend towards growing funding in startup AR and VR companies from investors. However, high development costs associated with ar and vr apps  poses a challenge. Key market players include Alphabet Inc., Apple Inc., Augmented Pixels Inc., Blippar Ltd., CyberGlove Systems Inc., Eon Reality Inc., HP Inc., HTC Corp., Innovega Inc., Lenovo Group Ltd., Magic Leap Inc., Maxst Co. Ltd., Microsoft Corp., PTC Inc., Samsung Electronics Co. Ltd., Seiko Epson Corp., Toshiba Corp., Vuzix Corp., Wikitude GmbH, and Zugara Inc..

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Market Driver

Augmented Reality (AR) and Virtual Reality (VR) markets are experiencing significant growth, driven by trends in 3D environments and models, 5G networks, and advanced technologies like AI and gesture-tracking devices. AR technology is gaining traction in commercial industries, including architecture, engineering, and manufacturing, with applications in consumer electronics, e-commerce, and entertainment. HMDs (Head-mounted displays) and heads-up displays are becoming common in aerospace & defense, healthcare, and industrial automation. VR technology is revolutionizing gaming, training simulations, and mental illness treatments. Investment activity is high in IT & telecommunication, media & entertainment, and tourism businesses. Semiconductor components and network infrastructure are crucial for the development of AR and VR hardware. Technical expertise is in demand for software development and integration of SoC (System on Chip) in AR and VR applications. Overall, the AR and VR markets offer vast opportunities for innovation and growth across various sectors. 

The global Augmented Reality (AR) and Virtual Reality (VR) market is experiencing significant growth due to increasing collaborations and partnerships among vendors. These strategic alliances enable companies to expand their product offerings and explore new applications for their AR and VR software platforms. For instance, in March 2020, Valve, Microsoft Corp., and HP Inc. Announced a partnership to develop a next-generation SteamVR headset, named HP Reverb G2. Such collaborations are expected to fuel the growth of the AR and VR market during the forecast period. Vendors are leveraging these partnerships to enhance their product portfolios and cater to the evolving needs of end-users. 

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 Market Challenges

• Augmented Reality (AR) and Virtual Reality (VR) markets are experiencing significant growth due to increasing demand from various industries. Challenges include creating 3D environments and models for experiences, integrating AR technology with 5G networks, and developing AR applications for aerospace & defense, architecture, and commercial industries. Hardware such as cameras, HMDs (Head-mounted displays), and gesture-tracking devices are essential for AR and VR. Consumer engagement is a key driver in consumer electronics, consumer goods, e-commerce, and entertainment sectors. Industries like healthcare, manufacturing, and IT & telecommunication are investing in AR and VR for training, simulations, and network infrastructure. Technical expertise and security compliance are crucial for AR and VR adoption. Tourism businesses, travel & tourism, and education are exploring AR and VR for innovative experiences. AR and VR technology have applications in gaming, mental illnesses, industrial automation, and infotainment industries. Semiconductor components and SoC integration are vital for AR and VR hardware development. Overall, the AR and VR markets present significant opportunities and challenges for businesses.
• AR and VR projects involve various components, including hardware, software, and content creation. The cost of developing VR apps includes expenses for creating and distributing VR content, as well as the cost of hardware and software. While 360-degree cameras are an affordable option for creating panoramic content, more complex computer-generated graphics require higher investment. Interactive content is crucial for the success of VR games. Developing realistic VR content necessitates the use of 360-degree cameras, computer graphics, and high-end photorealistic cameras. The cost of creating VR content for an app ranges from USD50,000 to USD100,000. As a professional, it's essential to consider all costs involved in creating engaging and AR and VR experiences.

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Segment Overview 

This augmented reality and virtual reality market report extensively covers market segmentation by  

1. Technology 
• 1.1 AR
• 1.2 VR
2. Application 
• 2.1 Consumer
• 2.2 Enterprise
3. Geography 
• 3.1 North America
• 3.2 APAC
• 3.3 Europe
• 3.4 Middle East and Africa
• 3.5 South America

1.1 AR-  The Augmented Reality (AR) segment is experiencing significant growth due to increasing new product launches, expanding application areas, and rising investments in AR technology. AR is an interactive experience that overlays digital information onto the real world, available through apps or web-based platforms. Its extensive use in enterprise, retail, healthcare, media and entertainment, and education sectors is driving demand. Key players, including Alphabet and Microsoft, are developing software kits and platforms to fuel AR adoption. For instance, Microsoft's Mesh service enables collaborative AR applications. Technological advancements in AR hardware and software, such as smartphones with AR capabilities, are making AR more accessible. The need for remote collaboration and training solutions, accelerated by the COVID-19 pandemic, is also boosting AR adoption. Major vendors like Microsoft, Google, and Apple offer AR technology for enterprise applications, such as remote assistance, training, and product visualization. The growth of the AR segment will continue due to its increasing adoption across industries, advancements in technology, and the democratization of AR through accessible hardware and software.

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Research Analysis

Augmented Reality (AR) and Virtual Reality (VR) technologies are revolutionizing various industries by offering experiences. AR overlays digital 3D models onto the real world, enhancing information and interaction. Smartphones and smart glasses serve as popular platforms for AR, while heads-up displays provide real-time information in vehicles. VR, on the other hand, transports users into a fully 3D environment, making it a hit in gaming, simulations, and infotainment. Investment activity in AR and VR has been surging, with significant funding in VR gaming and technology development. Industries like manufacturing, industrial automation, self-monitoring devices, and healthcare are adopting these technologies for training, design, and therapy. Engineers use AR and VR for prototyping, while SoC integration enables better performance and power efficiency. VR exposure therapy is a promising application in the mental health field.

Market Research Overview

Augmented Reality (AR) and Virtual Reality (VR) are transformative technologies that merge digital 3D models and environments with the physical world. AR technology overlays digital information onto real-world environments using cameras, HMDs, or smartphones, enhancing consumer engagement in industries like commercial industries, consumer electronics, e-commerce, and entertainment. AR applications include information search, gaming, and industrial automation, while VR technology immerses users in fully digital 3D environments, revolutionizing industries like aerospace & defense, architecture, engineering, healthcare, and manufacturing. 5G networks and cloud-based AR applications enable seamless experiences, while hardware like HMDs, gesture-tracking devices, and position trackers enhance user interaction. VR technology finds applications in gaming, entertainment, simulations, and mental illnesses treatment. The IT & telecommunication, infotainment, and tourism industries also benefit from these technologies, with investment activity and technical expertise driving growth. Semiconductor components and network infrastructure are essential for hardware development, while software solutions enable customized experiences. AR and VR technologies are poised to revolutionize various sectors, offering new opportunities for innovation and growth.

Table of Contents:

1. Executive Summary
2. Market Landscape
3. Market Sizing
4. Historic Market Size
5. Five Forces Analysis
6. Market Segmentation
   • Technology
     • AR
     • VR
   • Application
     • Consumer
     • Enterprise
   • Geography
     • North America
     • APAC
     • Europe
     • Middle East And Africa
     • South America
7. Customer Landscape
8. Geographic Landscape
9. Drivers, Challenges, and Trends
10. Company Landscape
11. Company Analysis
12. Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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SOURCE Technavio