AR and VR Market Estimated to Reach US$252 Billion by 2028

AR and VR market to grow at 36.9% CAGR and reach US$252 Billion by 2028

Augmented reality (AR) and virtual reality (VR) are two technologies that enable users to experience immersive and interactive digital environments. AR overlays digital information onto the real world, while VR creates a fully simulated environment that blocks out the real world. Both technologies have applications in various domains, such as entertainment, education, healthcare, retail, tourism, and industrial sectors.

The global AR and VR market size is expected to reach US$252 billion by 2028, growing at a compound annual growth rate (CAGR) of 36.9% from 2021 to 2028, according to a report by Insight Partners. The report attributes the market growth to several factors.

The report segments the global AR and VR market by technology, component, device type, application, and region. Based on technology, the market is divided into AR and VR. The AR segment accounted for a larger market share in 2021, owing to the increasing popularity and availability of mobile AR applications and devices, such as smartphones, tablets, and smart glasses. The VR segment is expected to grow at a higher CAGR during the forecast period, due to the rising demand for immersive and realistic VR experiences, especially in the gaming and entertainment sectors.

Based on components, the market is divided into semiconductor components, sensors, and others. The semiconductor components segment dominated the market in 2021, as they are essential for the functioning and performance of AR and VR devices and applications. The sensors segment is projected to grow at the highest CAGR during the forecast period, as they enable the detection and tracking of the user's movements, gestures, and environment, which are crucial for the interactivity and immersion of AR and VR technologies.

Based on device type, AR and VR gadgets make up the two segments of the market. The AR devices segment is further sub-segmented into head-mounted displays (HMDs), head-up displays (HUDs), and handheld devices. The VR devices segment is further sub-segmented into HMDs, gesture-tracking devices, and projectors and display walls. The AR devices segment held a larger market share in 2021, as they are more widely used and accessible than VR devices, especially in the consumer and commercial sectors. The VR devices segment is anticipated to grow at a faster CAGR during the forecast period, as they offer a more immersive and engaging VR experience than AR devices, especially in the entertainment and industrial sectors.

Based on application, the market is divided into consumer, commercial, enterprise, and others. The consumer segment accounted for the largest market share in 2021, as AR and VR technologies are widely used for entertainment and gaming purposes by consumers. The enterprise segment is expected to grow at the highest CAGR during the forecast period, as AR and VR technologies are increasingly adopted for various purposes, such as training, education, healthcare, manufacturing, and defense, by enterprises.

Based on region, Europe, Asia-Pacific, Middle East and Africa, South America, and North America make up the market segments. North America dominated the market in 2021, as the region has a high penetration of AR and VR technologies, as well as a strong presence of leading players, such as Microsoft, Google, Facebook, and Apple. Asia-Pacific is expected to grow at the highest CAGR during the forecast period, as the region has a large and growing population of AR and VR users, as well as a rising demand for AR and VR technologies, especially in the gaming, entertainment, and education sectors.

The global AR and VR market is highly competitive and fragmented, with the presence of several players, both large and small, that offer a variety of AR and VR devices and applications. Some of the key players in the market are Microsoft Corporation, Google LLC, Facebook Inc., Apple Inc., Samsung Electronics Co. Ltd., Sony Corporation, HTC Corporation, Lenovo Group Limited, Magic Leap Inc., and Vuzix Corporation. These players are adopting various strategies, such as product launches, partnerships, collaborations, mergers and acquisitions, and research and development, to gain a competitive edge and expand their market presence.