Summary
The Extended Reality (XR) Market is expected to register a CAGR of 34.94% over the forecast period. Extended reality (XR) is a new umbrella word for immersive technologies, including virtual reality, augmented reality, and mixed reality, as well as additional future realities that these technologies are expected to bring. The market need is driven by increased demand for shorter distances between individuals and better visual information.
Key Highlights
The notion of live virtual entertainment is spreading worldwide. People prefer at-home entertainment using technologies to attend live shows or events. With technology providing consumers with an immersive and real-world experience, the demand for live concerts, live shows, and sports is increasing substantially.
For instance, in April 2022, the rock band Foo Fighters held a show on Meta’s virtual platform. Over the Meta Quest headphone, the concert provided 180-degree live footage. Thus, the increased demand for online live entertainment will likely drive market growth.
The increasing adoption of gesture-based computing, the growing trend of miniaturization in smart devices, along with technological advancement, and various growth strategies adopted by companies are expected to drive market growth during the forecast period.
Training a larger audience is one of the most challenging difficulties confronting XR technology. The current applications in development (for usage on tablets, smartphones, and wearables) are restricted to a single user. To make XR more accessible, multi-user, consistent, and simplified experiences must be created. The availability of such solutions in the present market scenario is restricted, posing a substantial impediment to the industry’s growth.
According to the World Economic Forum, more than a billion people will require to reskill by 2030 as the basic competencies necessary for work throughout industries shift. Companies must thus build engaging training courses to equip their workforce with these new abilities. Immersive learning, based on extended reality (XR) technology, allows employees to engage in "hands-on"knowledge and has been demonstrated to increase learning retention. Such initiatives are projected to boost the demand for XR technologies and help the market growth in the Post COVID-19 scenario.
Extended Reality (XR) Market Trends
Virtual Reality Segment to Hold Major Share
Virtual reality uses computer technology to simulate a three-dimensional, interactive environment where things have a sense of spatial presence. The user feels wholly immersed in this computer-generated environment, with items and scenarios replicating real-world ones. A virtual reality helmet or headset is utilized to experience this world.
Contrary to AR, users of VR devices use completely immersive headsets, base stations, sensors, and controllers. Some devices can also be tethered to PCs equipped with powerful graphics processors for maximum usefulness. Such factors drive various end-users to adopt VR technology, thereby driving the market’s growth.
Head-mounted display (HMD) is anticipated to hold a significant share in driving market expansion for VR devices. The customer response to these displays, made by manufacturers like Sony, Oculus, HTC, Samsung, and Google, has been positive. The main uses of HMD are for entertainment and gaming. As their use in consumer applications has increased, gesture-tracking devices have become a crucial component of VR hardware.
A VR headset with a wide-angle viewing window is currently used in technology. The headset often incorporates motion sensors, accelerometers that measure movement and speed, proximity sensors, gyroscopes, and other new technologies. These elements interpret the wearer’s motions and translate them into actions in a game or other applications. PlayStation VR, Oculus Rift, and HTC Vive are some prominent VR headsets. These innovations use haptic feedback and finger tracking to improve user immersion and experience. Such features are further driving customer engagement through the adoption of the technology.
Moreover, the growing pervasiveness of AI technology across VR applications is also enhancing the intelligence of virtual characters. Google’s machine learning tools add 6DoF controller-tracking capabilities to any standalone headset. At the same time, Facebook’s DeepFocus framework uses AI to create focus effects in VR, and LG uses AI to minimize motion sickness among VR users. The Chinese tech leaders Baidu and Tencent are also working on integrating AI and VR into mobile solutions and video games.
The growing number of competitors in regions like the Asia-Pacific is expected to aid the expansion of the VR market. The rapid rise in the commercial and consumer markets is one of the main factors propelling the VR market in APAC. In addition, expanding consumer and commercial markets and rising investment in nations like China, Japan, and India are expected to accelerate the growth of the VR industry in APAC. Due to the region’s easy access to VR technology, its application has grown in both the business and consumer industries throughout APAC. The accessibility of inexpensive VR headsets in APAC nations will aid in the region’s industry seeing rapid growth.
North America is Expected to Hold a Significant Market Share
The North American region of the extended reality market is expected to grow significantly over the forecast period, owing to many vendors making considerable investments in market innovation.
Globally, the United States has been one of the highly innovative Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR) markets. Most companies advancing in this technology are based in the United States. High technology exposure and the ease of smart devices have created a strong demand in the region. Microsoft’s AR product, Hololens, first released in the United States and Canada, received a positive response from users in the country.
The region is also expected to hold a significant market share, as the US Government has been finding direct and indirect ways to use these technologies to facilitate innovations and promote prosperity. Moreover, the Foreign Service Institute at the State Department has introduced VR as an experiential learning tool in specific training. Moreover, various AR and VR training programs have been implemented to develop local workforces and manage wastewater. The region is also dominating the market owing to the high technology exposure and the easy availability of resources, which created a robust demand for extended reality devices. Many regional companies are deploying innovative technology into their AR/VR wearables.
Moreover, the regional telecom companies are also aggressively making efforts toward attracting customers to use their 5G networks. Hence, these regional vendors are investing and innovating software and platforms for developing AR applications by leveraging the upcoming 5G technology.
Extended Reality (XR) Market Competitor Analysis
The extended reality (XR) market is consolidated, with only a few participants like Accenture PLC, Microsoft Corporation, and Qualcomm Technologies Inc. Several businesses are spreading their services to obtain a market share across the rising market. However, as immersive technological trends throughout the virtual platform evolve, new firms are extending their market position by improving their offerings and expanding their commercial base throughout emerging nations. Moreover, companies are involved in various strategies to gain a competitive edge.
In November 2022, Varjo announced its newest headset, XR-3 Focal Edition, which delivers superior visual quality for mixed-reality implementations where real-world objects such as car dashboards, cockpits, cell phones, and kneeboards are well utilized. The XR-3 Focal Edition provides the ultimate visual precision for advanced use cases where visualizing illustrations and small text, especially on the physical instruments in mixed reality, is primarily mission-critical.
In September 2022, Qualcomm Technologies Inc. and Meta Platforms Inc. announced a multi-year agreement to collaborate on a new era of spatial computing powered by Snapdragon extended reality (XR) platforms and technologies for the Meta Quest platform.
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