The latest research on Augmented Reality and Virtual Reality Market study offers an all-inclusive analysis of the major strategies, corporate models, and market shares of the most noticeable players in this market. Augmented Reality and Virtual Reality Market based on technology, the augmented reality (AR) market is projected to grow from USD 15.3 billion in 2020 to USD 77.0 billion by 2025; it is expected to grow at a CAGR of 38.1% from 2020 to 2025. The virtual reality (VR) market is projected to grow from USD 6.1 billion in 2020 to USD 20.9 billion by 2025; it is expected to grow at a CAGR of 27.9% from 2020 to 2025.

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Major vendors in the augmented reality and virtual reality market include Google (US), PTC (US), Apple (US), Sony (Japan), Samsung Electronics (South Korea), Microsoft (US), HTC (Taiwan), Oculus (US), Seiko Epson (Japan), Lenovo (China), Wikitude (Austria), Magic Leap (US), Blippar (UK), Upskill (US), MAXST (South Korea), EON Reality (US), Vuzix (US), CyberGlove Systems (US), Leap Motion (US), and Sixense Enterprises (US).
Augmented Reality and Virtual Reality Market Size, Forecast to 2025 With COVID-19 Impact Analysis
The COVID-19 pandemic is expected to positively impact the growth of the AR and VR market for healthcare application, as AR VR HMDs are expected to be majorly adopted by medical professionals as protective gear in the near future. COVID-19 has negatively impacted the supply chain of the market due to lockdowns and low cross-border trade. Due to the COVID-19 pandemic, the global consumer market for AR & VR is expected to witness sluggish growth in the coming years. The shutdown of consumer markets worldwide has affected the sale of products such as HMDs and projectors. However, the market for VR is expected to regain its complete momentum by 2023.
Augmented Reality and Virtual Reality Market Dynamics
Driver : Increasing demand for AR devices and applications in healthcare
AR plays an important role in the healthcare sector. AR can be used to provide a virtual view of a patient, in which a surgeon can see the condition of the patient’s body parts. This can help the surgeon to conduct minimally invasive surgeries. The use of AR modeling and 3D visualization is expected to help the healthcare sector. The use of AR for improving fitness, teaching complex subjects to medical students, training doctors, managing pharmacy, and caring and supporting patients after they leave the hospital is driving the growth of the augmented reality and virtual reality market in this sector.
Restraint: Limited user interface affecting the navigation performance of AR apps
Security and privacy issues associated with AR
Security and privacy issues are the major challenges faced by the augmented reality and virtual reality market. These issues have emerged due to the inconsistencies in AR programming and negligence and oversight of both the developers and end-users of AR apps and devices. Few AR applications do not have the capabilities to secure user identity and privacy. The primary issue is that there are no regulations that define the dos and don’ts associated with the AR environment. This implies that AR technology can incorporate malicious intent and lead to users’ misuse of personal information. For instance, the try-before-you-buy concept for clothing retailers can be misused. If the concept is not secured well, it can be hijacked. The hacker can overlay a nude body image instead of clothes, which can harm the user’s reputation. An unsafe try-before-you-buy app can be manipulated, which is a major factor restraining such apps’ growth in the retail clothing sector.
Opportunity: Rise in demand for AR in architecture
The increasing demand for AR in architecture would be a major opportunity for the augmented reality and virtual reality market growth. AR can be used to project digital information on architectural models. It can also be used to experience a building’s interior even when the design of the building is in its initial stages. This will help the architects get an image of the project from the screen to the physical space. Streamlining of the construction process is another application in the construction industry using AR. In architecture, AR systems are used for interior design applications, through which a user can transform 2D drawings into 3D physical models and digital simulations. The AR-based architecture applications help users to choose accurate models and designs before construction by looking at their 3D representation. Using these applications, users can rearrange designs and floorings in a building. They can create and analyze a detailed model to evaluate their designs based on sun exposure, cast shadows, wind pattern, and traffic congestion. Head-mounted displays can be used for site surveying and determining the location of underground cables. They can also be used as a visualization tool to track how the building would respond to the surroundings.
Challenge: Display latency and limited field of view
The major challenge faced by these AR 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; though, currently, AR and VR are capable of providing a FOV of up to 90°. For AR devices to create immersive experiences, they must capture as much of the FOV as possible. Another major challenge for the AR device and application manufacturers is to offer low latency displays. The errors caused by latency often lead to image lagging, thus posing a major challenge for the AR device and application manufacturers. While playing a game, high input lag makes the gameplay feel sluggish and unresponsive. A lower input lag level allows gamers to enjoy a seamless control experience, as movements on the screen respond instantly to the commands. This has been one of the biggest technical challenges faced by AR manufacturers. All possible systems are bound to have some threshold latency, which comes from the content frame rate, the display’s refresh rate, and input lag. Furthermore, these devices are largely being adopted by healthcare and aerospace & defense applications, where any late response would have catastrophic results.
Semi- and fully immersive technology to play a significant role in the growth of augmented reality and virtual reality market
Most companies are focused on developing immersive video games for users. VR headsets allow users to interact with the virtual world. The increasing demand for semi- and fully immersive VR devices results from enhancements in computing and electronic networking systems. Also, innovations—such as fully immersive VR technology-enabled HMDs that provide a 360° field of view and high resolution to a user—are expected to drive the growth of this market.
Software to play a significant role in the growth of augmented reality and virtual reality market
The Augmented Reality and Virtual Reality Market for software has witnessed high growth in recent years and is set to lead the AR & VR market for the next 5 years owing to the trend of VR content creation and AR gaming. The mass consumerization would help achieve widespread adoption of AR and VR. Delays in the launching of new AR & VR hardware, coupled with a decline in the sale of AR & VR hardware, has negatively impacted the revenue growth of the AR & VR software market. However, the increasing need for maintaining social distancing to curb the spread of the virus is expected to increase the adoption of AR & VR technologies and create growth opportunities for AR & VR software providers in the retail, consumer, education, and enterprise sectors.
Commercial application expected to grow at a high CAGR in the augmented reality and virtual reality market
There has been a constant evolution over the decades in the way goods and services are promoted and marketed. Technological advancements have changed the traditional methods of marketing and promotion. The advent of the Internet and smartphones, combined with content-based technologies, e.g., AR, has helped enhance marketing activities. Using AR, a buyer can compare the products by superimposing virtual images in the real world. This not only helps the buyers in the decision-making process but is also convenient for sellers. The enhanced buying experience is beneficial for the entire retail industry segment.AR tags can be scanned using AR-enabled smartphones, which not only display the advertisement but also create an interactive environment for the users. By clicking the image or I con, the users can examine and purchase the products through their smartphones or tablets. Such advantages are the major reason for the heavy penetration of AR technology in the marketing and promotion segment.

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APAC is expected to lead the augmented reality and virtual reality market and is projected to grow at the highest CAGR from 2020 to 2025
Being an emerging economy, APAC is witnessing major changes in the adoption of new technologies and advancements. Due to the presence of a number of display panel manufacturers in the region, APAC witnesses an increasing adoption of the latest technologies. The AR & VR market in APAC is expected to grow at a high rate in sectors such as healthcare, commercial, and consumer. The increasing number of players in the region is projected to boost the growth of the AR & VR market. The high growth in commercial and consumer markets is the major factor driving the growth of the AR & VR market in APAC. Growing consumer and commercial markets with increasing investments in countries such as Japan, India, and China are expected to boost the growth of the augmented reality and virtual reality market in APAC.
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