Augmented Reality and Virtual Reality Market Research Report and Outlook by 2028

The augmented reality (AR) and virtual reality (VR) market is projected to expand from US$ 27.96 billion in 2021 to US$ 252.16 billion by 2028, reflecting a compound annual growth rate (CAGR) of 36.9% during the period from 2021 to 2028.

The integration of AI-driven chatbots and virtual assistants has greatly enhanced customer support functions across various businesses. Nevertheless, remote troubleshooting remains a significant hurdle for these chatbots. To overcome this challenge, companies are increasingly adopting virtual reality technology to improve customer interactions and satisfaction, while also addressing complex issues more efficiently. Implementing superior customer service strategies is an effective way for businesses to show appreciation for their clientele, and virtual reality stands out as one of the most sophisticated technologies that can aid the retail industry in this endeavor. By crafting an immersive experience that engages the senses and fosters a strong emotional bond, virtual reality enables businesses to connect with customers in innovative and meaningful ways, potentially leading to repeat purchases and enhanced brand loyalty. Furthermore, virtual reality offers marketers a platform to create captivating and emotionally resonant VR advertisements that showcase products in unique formats. For instance, The North Face utilized virtual reality to develop an immersive experience that allowed customers to engage with the brand's essence through the stunning landscapes of Nepal. Consequently, the adoption of virtual reality solutions in retail environments is propelling the growth of the augmented reality and virtual reality market.

Globally, the adoption of augmented reality (AR) is increasing, fueled by heightened investments in the AR sector, a rising demand for AR devices and solutions in healthcare, and a growing interest in AR applications within e-commerce and retail. In the healthcare domain, AR technology can provide surgeons with a virtual representation of a patient's anatomy, allowing for more accurate evaluations and enhanced precision during invasive procedures. AR is also being utilized in medical training, fitness applications, pharmacy management, and patient care. The VR market is similarly growing, driven by the availability of cost-effective VR devices, the rising use of head-mounted displays (HMDs) across various sectors, technological innovations, and the ongoing digital transformation. The COVID-19 pandemic has further accelerated the adoption of HMDs in gaming and entertainment. However, challenges such as the lack of intuitive interfaces, insufficient processing power, and limited storage capacity for AR devices are impeding the growth of the AR and VR market.

Effects of the COVID-19 Pandemic on the Augmented Reality and Virtual Reality Market

In the near future, it is anticipated that healthcare professionals will increasingly utilize AR and VR technologies through head-mounted displays (HMDs) as protective equipment. Despite the adverse impacts of COVID-19 lockdowns and reduced international trade, the AR and VR market has continued to thrive, largely due to the growing adoption of these technologies in remote and hybrid work settings. An article from INEWS highlights the application of AR technology, big data, and Web 3D at the China Spring Cloud Auto Show, which showcased advanced technologies and products from various angles, positively influencing the global AR and VR market in 2020. HTC Corporation hosted a virtual conference for developers utilizing VR technology in 2021, and the ongoing digital transformation in sectors such as retail (e-commerce), education (e-learning), and healthcare (advanced medical equipment) is expected to further bolster the growth of the AR and VR market in the future.

The augmented reality and virtual reality market is categorized by technology into augmented reality and virtual reality segments. In 2021, the augmented reality segment dominated the market. By component, the market is divided into semiconductor components, sensors, and others, with the semiconductor components segment holding the largest market share in 2021. The end-user industries for the augmented reality and virtual reality market include entertainment, education, industrial applications, healthcare, real estate and architecture, retail, aerospace and defense, among others. The entertainment sector accounted for the largest market share in 2021. Geographically, the augmented reality and virtual reality market is segmented into North America, Europe, Asia Pacific (APAC), the Middle East and Africa (MEA), and South America (SAM), with North America leading the market share in 2021.

The size of the augmented reality and virtual reality market has been determined through a combination of primary and secondary research methodologies. The research process commenced with comprehensive secondary research, utilizing both internal and external sources to gather qualitative and quantitative data relevant to the market. This approach provided a detailed overview and forecast for the AR and VR market across all segments, including the five major regions: North America, Europe, Asia Pacific, Middle East and Africa, and South America. To validate the data and gain deeper analytical insights, primary interviews were conducted with industry stakeholders, including VPs, business development managers, market intelligence managers, national sales managers, and external consultants such as valuation experts, research analysts, and key opinion leaders specializing in the AR and VR market.

Key players in the augmented reality and virtual reality market include Immersive Gaze, Google LLC, EON Reality, Vuzix Corporation, Blippar Group Limited (Layar B V), Innovega Inc., Simulanis Solutions Private Limited, Kanda ApS, YeppAR, and Zugara, Inc.