The global Augmented Reality (AR) and Virtual Reality (VR) market is currently generating revenue of around USD 22.1 billion in 2020 and is expected to reach the USD 161 billion-mark by 2025. Learning, training, and scientific visualizations are a few of the most significant Virtual Reality technology applications that help reduce investments and enrich a wide range of industries. 

The increasing demand for smartphones and tablets is extensively contributing to the growth of the AR and VR market across the world. The COVID-19 pandemic has emerged as an opportunity for computer-related technologies to fight against the outbreak. Many tech giants and start-ups are currently working on preventing the spread of the virus by working remotely. For example, the tech giant Microsoft has announced to organize its events like Microsoft Ignite, and Microsoft Build 2020 digitally till 2021.

Market Segmentation is Based on the Following Factors:

1. Component

Based on components, the global AR and VR market can be segmented into hardware and software. The hardware segment includes the console (like PCs or smartphones), input devices, and output devices. In 2019, the hardware segment dominated the market, with a share of 68.8%. The increased the penetration of smartphones and other electronic devices across the world. The launch of Virtual Reality devices like HTC Vive Focus, Lenovo Mirage Solo, and Oculus Go has boosted the hardware market’s growth.

The software segment is expected to witness the fastest growth this industry has ever seen in the upcoming period. This segment accounts for managing the input and output devices, analyzing their incoming data, and generating proper feedback. VR software creates an engaging 3D environment that can be used for product prototyping or training. Some of the software’s internal segments include training software, simulation software, gamification software, segmented reality software, and learning experience software.

2. Device Type

The Augmented Reality and Virtual Reality market can be categorized into AR devices and VR devices based on the device type. In terms of revenue, the Head-Mounted Display (HMD) dominated the market with a share of 61.4% in 2019. HMD is used widely to display interactive virtual images and the deployment of Augmented Reality (AR). The main applications of HMD include

a.) Aviation and Military,

b.) Training and Simulation,

c.) Engineering and Research.

But in the future, the Gesture-Tracking Device (GTD) market is expected to register the highest CAGR of 24.3% and a significant change in its demand in the years to come. The GTD device segment includes Virtual Reality projectors, large-screen monitors, and multiple projection systems.

3. Application 

The global market of Augmented Reality and Virtual Reality market can be categorized into AR and VR applications. The commercial application segment currently dominates the market with 52.5% due to the quick adoption of Virtual Reality systems in the Gaming and Entertainment industry. The extensive use of smartphones has resulted in the implementation of VR technology in commercial applications. For example, the British Museum has launched its VR Experience in 2017, which provided the users with an unparalleled digital experience by using a mobile device or computer and a headset

The gaming industry falls under one of the most popular applications which have witnessed significant growth in recent years. The availability of multiple gaming content and advanced immersive experience has helped adopt Virtual Reality in the gaming industry. Other consumer applications in the entertainment industry include VR theme parks, VR art galleries, and music VR experience.

4. Technology

With 79.4%, the semi and fully immersive segment currently dominates the market in terms of revenue. This segment mostly relies on high-resolution displays, high-processing PCs, and hard simulators. There are multiple uses of semi and fully immersive technology in Education, Entertainment, Automotive, Construction, and Aviation. For example, the Aviation industry trains pilots with the application of semi-immersive Virtual Reality.

Non-immersive technology provides users with a computer-generated environment that does not offer an immersion into a virtual world. Such systems depend on display, input devices like keyboard and mouse, and computer or video game consoles. Non-immersive systems give users higher accessibility and efficiency of the network management system. Still, they remain limited to a few applications such as gaming, designing, and healthcare due to its 2-dimensional digital content perception.

What are the Growth Drivers in the AR/VR Market?

In partnership with the Entertainment industry, Virtual Reality has recognized many potential opportunities offering rapid developments in smart consumer electronic devices. The top five electronic devices, acting as the growth drivers in the AR and VR market, are:

1. Norm Glasses

Featuring an Android-based operating system, speakers, camera, voice user interface, and display. AR-enabled Norm Glasses lets users live hands-free. The glasses offer captioning for the hearing impaired users and get activated through voice and remote assistants for the visually impaired users.

2. BadVR

The engaging analytics platform of BadVR helps companies get access to actionable insights. The program lets users adjust variables in real-time to see how the data responds. They can also share the results with their collaborators through a link. With this platform, users can transform any dataset into a virtual and visual representation that they can easily manipulate and analyze.

3. Mieron

Mieron VR has been selected by the Consumer Technology Association (CTA)® Foundation as one of the winners of the CES 2020 Eureka Park Accessibility Contest. Mieron VR has announced a headset which will offer VR rehabilitation exercises as games. From upper body mobility to core engagement, VR Neurotherapy will excite nerve pathways that will reduce the users’ pain perception.

4. HTC VIVE Pro Eye

HTC VIVE Pro Eye is a function that helps businesses to keep track of user engagement and behavior during virtual product demos. It allows the user to uncover hidden insights that result in better-informed business decisions. It also includes an advanced eye-tracking system within the VR headset.

5. Spatial

With Spatial, organizations can transform any room into their workplace. Through realistic avatars, 3D web browsers projecting into VR spaces, and cross platforms, it helps teams from anywhere in the world get the feel of having face-to-face meetings. Teams can collaborate from any part of the world and show presentations and product demos in the way they would have done in person.

What are the Companies doing to grow their Market Share in the future?

Currently, the vendors are focussing on expanding their customer base in the industry. Therefore, they take various strategic initiatives like Mergers & Acquisitions, Collaborations, and Partnerships with other key players. For example, in April 2020, Apple has announced its plan to acquire NextVR, a U.S. based VR company, which will propel Apple’s VR initiatives for sports and entertainment. Similarly, in February 2020, Facebook announced that it had acquired SANZARU, an American video game development company that is expected to expand Facebook’s Virtual Reality gaming offerings. Through the acquisitions, these companies aim to enhance their product portfolios and accelerate their growth in the global AR and VR market, which is expected to positively impact the growth of the market during the forecast period.

Oishee Mukherjee is a blogger, published author of 2 books, and a full-time content writer. She has worked for various industries like entertainment, technology, finance, sports, social, and digital media to name a few. Her educational background includes graduation in English Literature and an MBA in Media & Communications, which has taught her the power of storytelling that she implements to bring out the voice of the brands she works for.

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