Extended Reality Market by Technology (AR, VR, MR), Offering (Hardware, Software), Device Type (AR Devices, VR Devices, MR Devices), Application (Consumer, Commercial, Enterprises, Automotive) and Region - Global Forecast to 2028
Updated on : October 04 , 2023
The extended reality market size is projected to reach USD 111.5 billion by 2028 from USD 40.1 billion in 2023, at a CAGR of 22.7% from 2023 to 2028. Surging deployment of extended reality in education sector and industrial training and continuous developments in 5G technology are some of the major factors driving the market growth globally.
Extended Reality Market Forecast to 2028
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Extended Reality Market Dynamics
Driver: Availability of affordable VR devices
The availability of affordable VR devices has not only increased the number of consumers using XR technology but has also encouraged the development of new and innovative XR applications. This has led to a proliferation of XR content, including games, simulations, and training programs, all of which are driving the growth of the XR market. In addition, the affordability of VR devices has encouraged businesses to explore the use of XR technology in a range of industries, including healthcare, education, and entertainment. This has led to the development of new XR applications that are tailored to specific industries, further driving the growth of the XR market.
Restraint: Excessive use of extended reality devices cause health issues
Extended reality devices are highly sophisticated ones, but they have also become the focus of health concerns. The most common risk is injuries caused to users due to their bumping into real objects while being engrossed in the virtual world. A number of users have also reported headaches, eye strain, dizziness, and nausea after using extended reality devices. According to research by the University of Leeds, exposure to virtual reality for 20 minutes is expected to affect the ability of some children to discern the distance to objects. Moreover, the regular use of such devices is anticipated to accelerate the propagation of myopia at a global level.
Opportunity: Growth of global travel and tourism industry
The travel and tourism industry is one of the fastest-growing industries worldwide. Extended reality technology is witnessing acceptance across various sectors, such as hospitality. It is also being adopted in airlines and travel services. Extended reality technology can create magic by delivering immersive experiences to users that will change the way one connects with people and information for enhanced experiences. For instance, Air New Zealand uses the HoloLens of Microsoft to enhance the in-flight experiences of passengers. The cabin crew of airlines uses HoloLens headsets to access key information such as the choice of meals, drinks, onward travel plans, and even the emotions of passengers. Hotel Marriott International launched extended reality technology-based services such as VRoom services and VR postcards to allow guests to experience exotic locations in the comfort and convenience of their hotel rooms.
Challenge: Display latency and limited field of view
The major challenge faced by these AR/VR 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 and VR 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 are Microsoft (US), Sony Group Corporation (Japan), Meta Platforms, Inc. (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.
In 2023, the software segment held the larger share of the extended reality market.
In 2023, the software segment held the larger share of the extended reality market and is expected to continue to do so during the forecast period. The dominance of the segment can be attributed to the large-scale adoption of different extended reality technologies such as augmented reality, virtual reality, and mixed reality. For instance, retail stores like IKEA and Walmart use AR/VR applications to enhance the shopping experience of their customers. Also, AR/VR gaming applications are gaining traction now-a-days, leading to increased pressure on software providers to develop advanced and innovative gaming applications. This is expected to support market growth in the coming years.
Automotive application segment is likely to grow at the highest CAGR during the forecast period
The automotive application segment is likely to grow at the highest CAGR during the forecast period. The growth can be attributed to the increased focus of automotive manufacturers on enhancing the user experience. XR solutions are used by automotive manufacturers to train their staff. For instance, Maruti Suzuki set up a chain of simulation-based training centers in India, while Ford created a virtual laboratory for designing prototypes. In addition, AR and VR solutions are used in automotive showrooms to allow customers to experiment with the features of a new vehicle from a distance in a safe environment. These devices are also used by the staff to speed up the repair process. For instance, Porsche technicians leverage AR glasses to see schematic illustrations of vehicles in real time, leading to a 40% reduction in service resolution time. Owing to this, the segment is expected to witness growth in the future.
North America led the extended reality market in 2022
North America led the extended reality market in 2022. Growing use of smartphones, increasing adoption of smart electronic devices, increasing deployment of 5G technology, and surging demand for extended reality technology in various applications are the key factors fueling the growth of the extended reality market in North America. For instance, according to Telefonaktiebolaget LM Ericsson, it is predicted that North America will have the highest 5G subscription penetration rate among all regions, surpassing 90% by 2028.
Extended Reality Market by Region
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Top Extended Reality Companies - Key Market Players
The major players in the extended reality market include Microsoft (US), Sony Group Corporation (Japan), Meta Platforms, Inc. (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 have used both organic and inorganic growth strategies such as product launches and developments, partnerships, collaborations, contracts, agreements, alliances, joint ventures, expansions, and acquisitions to strengthen their position in the extended reality market.
Extended Reality Market Report Scope :
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Report Metric |
Details |
| Estimated Market Size | USD 40.1 Billion |
| Projected Market Size | USD 111.5 Billion |
| Growth Rate | CAGR of 22.7% |
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Market size available for years |
2019–2028 |
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Base year considered |
2022 |
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Forecast period |
2023–2028 |
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Forecast units |
Value (USD Million/Billion), Volume (Thousand Units) |
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Segments covered |
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Geographies covered |
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Companies covered |
The major players in the extended reality market are Microsoft (US), Sony Group Corporation (Japan), Meta Platforms, Inc. (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). |
Extended Reality Market Highlights
The study segments the extended reality market based on technology, offering, device type, application, Trends and region at the regional and global level.
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Segment |
Subsegment |
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By Technology |
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By Offering |
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By Device Type |
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Application |
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By Region |
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Recent Developments in Extended Reality Industry
- In February 2023, Sony Group Corporation launched PlayStation VR2 and PlayStation VR2 Sense Controller Charging Station to offer a unique gameplay experience. The PS VR2 features headset feedback, eye tracking, 3D audio, and adaptive triggers and haptic feedback from the PS VR2 Sense controllers.
- In January 2023, HTC Corporation launched the VIVE XR Elite, its latest all-in-one consumer flagship. This compact and lightweight headset that consists of powerful and versatile capabilities that merge mixed reality (MR) and virtual reality (VR) technologies. It is an ideal choice for various activities, such as gaming, productivity, fitness, and more.
- In November 2021, Samsung Electronics Co., Ltd. launched Dreamground, an AR experience aimed at encouraging creativity and discovery. This innovative concept merges physical structures with on-screen animation and customized AR features, providing users with both physical and digital playgrounds. Dreamground is available at two locations: Samsung 837, the company's flagship experiential store in New York City, and Hollywood Park in Los Angeles.
- In June 2020, PTC Inc. and Rockwell Automation together offered the PTC Vuforia Chalk AR software free of charge till August 2020 to help customers maintain business continuity while complying with applicable stay-at-home orders to tackle the spread of the COVID-19.
- In March 2020, Microsoft partnered with HP and Valve to launch a new VR headset in the market that delivers a highly immersive and comfortable VR experience to users.
Frequently Asked Questions (FAQ):
What is the current size of the global extended reality market?
The extended reality market is projected to reach USD 111.5 billion by 2028 from USD 40.1 billion in 2023, at a CAGR of 22.7% from 2023 to 2028.
Who are the winners in the global extended reality market?
Companies such as Microsoft (US), Sony Group Corporation (Japan), Meta Platforms, Inc. (US), HTC Corporation (Taiwan), Google (US), fall under the winners category.
Which region is expected to hold the highest market share?
Asia Pacific is expected to dominate the extended reality market during forecast period. Presence of established consumer electronics manufacturing companies, increasing yearly production of automotive and growing usage of smartphones are some of the major factors driving the market growth in the region.
What are the major drivers and opportunities related to extended reality market?
Surging deployment of extended reality in education sector and industrial training and continuous developments in 5G technology are some of the major drivers and opportunities for extended reality market.
What are the major strategies adopted by market players?
The key players have adopted product launches and developments, partnerships, collaborations, contracts, agreements, alliances, joint ventures, expansions, and acquisitions to strengthen their position in the extended reality market.
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The research study involved 4 major activities in estimating the size of the extended reality market. Exhaustive secondary research has been done to collect important information about the market and peer markets. The validation of these findings, assumptions, and sizing with the help of primary research with industry experts across the value chain has been the next step. Both top-down and bottom-up approaches have been used to estimate the market size. Post which the market breakdown and data triangulation have been adopted to estimate the market sizes of segments and sub-segments.
Secondary Research
In the secondary research process, various secondary sources were referred to for identifying and collecting information required for this study. The secondary sources include annual reports, press releases, and investor presentations of companies, white papers, and articles from recognized authors. Secondary research was mainly done to obtain key information about the market’s value chain, the pool of key market players, market segmentation according to industry trends, and regional outlook and developments from both market and technology perspectives.
Primary Research
In the primary research, various primary sources from both supply and demand sides were interviewed to obtain qualitative and quantitative insights required for this report. Primary sources from the supply side include experts such as CEOs, vice presidents, marketing directors, equipment manufacturers, technology and innovation directors, end users, and related executives from multiple key companies and organizations operating in the extended reality market ecosystem.
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
In the market engineering process, both top-down and bottom-up approaches along with data triangulation methods have been used to estimate and validate the size of the extended reality market and other dependent submarkets. The research methodology used to estimate the market sizes includes the following:
Estimating market size using bottom-up analysis (demand side)
- Entities in the extended reality value chain that influence the entire extended reality industry have been identified
- All key companies and related product manufacturers for the implementation of extended reality devices and software have been analyzed
- The market size for these extended reality technologies, devices, and applications has been estimated
- The developments related to extended reality carried out by various companies have been tracked, and the size of the extended reality market has been forecast based on these developments and other critical parameters
- Multiple discussions with the key opinion leaders have been conducted to understand the types of contracts made, along with the identification of devices and software sold by companies in the extended reality market; this is expected to help analyze the breakup of the scope of work carried out by each key company operating in the extended reality market
- The market estimates have been arrived at after studying various application-specific extended reality installations
- At every level, estimates have been verified and crosschecked through discussions with the key opinion leaders, which include chief executive officers (CEO), directors, and operation managers, and then finally with the domain experts in MarketsandMarkets
- This process also includes the study of various paid and unpaid sources of information, such as annual reports, press releases, white papers, and databases
Market Size Estimation Methodology-Bottom-up Approach
Estimating market size using top-down approach (supply side)
- Information related to revenues of companies that was offered by key device manufacturers has been gathered
- Multiple on-field discussions with the key opinion leaders have been conducted across each key company involved in the development of extended reality technologies and devices
- Geographic split has been estimated using secondary sources based on various factors, such as the number of players in a specific country and region, their application areas, and technology types implemented
Data Triangulation
After arriving at the overall market size from the estimation process explained above, the overall extended reality market has been split into several segments and sub-segments. To complete the overall market engineering process and arrive at the exact statistics for all segments and sub-segments, the data triangulation and market breakdown procedures have been used, wherever applicable. The data has been triangulated by studying various factors and trends from both the demand and supply sides. The extended reality market size has been validated using both top-down and bottom-up approaches.
Market Definition
The extended reality (XR) market represents the convergence of augmented reality (AR), virtual reality (VR), and mixed reality (MR). AR is an interactive, reality-based display environment that uses computer-generated sounds, text, and effects to enhance the real-world experience of users. It uses displays, sensors, and embedded electronic components to combine real and computer-based scenes and images to deliver a unified and enhanced view of the world.
VR technology provides users with a virtual environment using computer hardware and software. It provides a fully immersive environment wherein users can interact with objects similar to those in the real world. This technology uses gesture-recognition systems, sensors, and embedded electronic components. Processors help execute input and give users an output to perceive that virtual objects are a part of the environment.
MR technology allows users to see and immerse themselves in the world around them even as they interact with virtual environments using their hands without removing their headsets. It merges real and virtual worlds to create new environments and visualizations wherein physical and digital objects coexist and interact in real time.
Stakeholders
- Raw material suppliers
- Semiconductor foundries
- Original equipment manufacturers (OEMs)
- Augmented reality (AR), virtual reality (VR), and mixed reality (MR) device manufacturers
- Original design manufacturers (ODMs) and OEM technology solution providers
- Research organizations
- Technology standard organizations, forums, alliances, and associations
- Technology investors
- Governments, financial institutions, and investment communities
- Analysts and strategic business planners
The main objectives of this study are as follows:
- To define, describe, segment, and forecast the extended reality market size, by technology, offering, and application, in terms of value
- To describe and forecast the extended reality market size in four key regions, namely, North America, Europe, Asia Pacific, and Rest of the World (RoW), in terms of value
- To define, describe, segment, and forecast the extended reality market size, by device type, in terms of value and volume
- To provide qualitative information about different extended reality devices and the applications of extended reality solutions in different enterprises
- To provide detailed information regarding the key factors such as drivers, restraints, opportunities, and challenges influencing the growth of the market
- To provide details about the value chain of the extended reality market and provide detailed information regarding Porter's five forces, technology trends, product pricing, trade, use cases, and import and export trends pertaining to the extended reality market
- To provide a detailed impact of the recession on the global extended reality market
- To analyze opportunities in the market for stakeholders, along with a detailed competitive landscape of the extended reality market
- To analyze micromarkets1 with respect to individual growth trends, prospects, and contributions to the total market
- To strategically profile the key players and comprehensively analyze their market share and core competencies2, along with the competitive leadership mapping chart
- To analyze the competitive developments such as product launches and developments, partnerships, collaborations, contracts, agreements, alliances, joint ventures, expansions, and acquisitions in the extended reality market.
Available Customizations:
With the given market data, MarketsandMarkets offers customizations according to the specific requirements of companies. The following customization options are available for the report:
- Detailed analysis and profiling of additional market players (up to five)
Generating Response ...
Growth opportunities and latent adjacency in Extended Reality Market