The Extended Reality Market is estimated to be valued at US$ 46.3 Bn in 2023 and is expected to exhibit a CAGR of 2.3% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Extended reality refers to all real-and-virtual combined environments and human-machine interactions generated by computer technology and wearables. It includes augmented reality (AR), virtual reality (VR), and mixed reality (MR) and allows the user to interact with digital information in innovative ways by overlaying audio and visual enhancements onto the physical world. Extended reality has applications across industries including education, healthcare, retail, manufacturing, architecture, advertising and more. Through AR/VR/MR, complex simulations can replace physical prototypes lowering costs. In manufacturing, workers can access instructions/training virtually improving productivity. In retail, virtual product try-ons boost sales.
The first key driver for the Global Extended Reality Market is growing adoption of cloud-based extended reality platforms. Cloud computing allows delivery of extended reality content and services over the internet without requiring high performance hardware. This is positively impacting adoption as users need only a headset and internet connection for an immersive experience. Major tech players like Microsoft, Amazon, and Google offer cloud-based extended reality development platforms making content creation simpler and distribution scalable. The second driver is increasing investments from technology giants into the metaverse. Companies are investing billions to build futuristic virtual worlds which will be entirely experienced through extended reality technologies. This will drive widespread demand for AR/VR/MR devices and applications across different industry verticals.
The extended reality market can be segmented into augmented reality, virtual reality, and mixed reality. Among these, the augmented reality segment dominates the market and is expected to continue its dominance over the forecast period. This is because augmented reality allows integration of digital information with the physical world in real-time, which is being widely adopted across various sectors like retail, healthcare, automotive etc. for applications such as inventory management, medical training of healthcare professionals and collaborative product design.
Political: Favorable regulations around data privacy and security will boost the adoption of extended reality technologies. However, regulations around extended reality content may pose challenges.
Economic: High initial investments required for development of extended reality hardware and software poses challenges for startups. However, the growing GDP and disposable incomes will drive increased spending on these technologies.
Social: Increased digitalization and raising awareness about the benefits of extended reality is positively impacting the market. However, health risks associated with extensive use can hamper growth.
Technological: Developments in 5G networks, processors, displays and sensors will further improve user experiences and drive widespread adoption. However, concerns around technological readiness may exist in some underdeveloped regions.
The global extended reality market is expected to witness high growth, exhibiting CAGR of 23% over the forecast period, due to increasing investments from technology giants and growing applications across various sectors.
The North America region is expected to dominate the market over the forecast period, owing to high technology adoption and significant presence of key players in the US and Canada. The Asia Pacific region is anticipated to exhibit the fastest growth rate, with China, Japan and India emerging as major markets on back of growing online gaming and e-commerce industries.
Key players operating in the extended reality market are Meta Inc., HTC Corporation, Unity Technologies, Microsoft Corporation, Samsung Electronics Co., Ltd., Magic Leap, Sony Corporation, Vuzix Corporation, Apple Inc, Niantic Inc., Northern Digital Inc., Snap Inc., SoftServe, and Accenture. Major players are focusing on partnerships and investments in hardware and content development to strengthen their product portfolios.