News of renewed extended reality (XR) market growth has surfaced over the last few years, with numerous reports detailing the extent of its potential.
For example, market research from Precedence Research found that the global XR market stood at $35.14 billion USD in 2022.
It also estimates that the sector will reach around $345.9 billion USD by 2030, with a compound annual growth rate (CAGR) of 33.09 from 2022 to 2030.
Some of the largest takeaways from the report found that the augmented reality (AR) market had taken over 55 percent of global markets in 2021.
However, virtual reality (VR) was set to grow from 2022 to 2030, with software making significant gains in the same period. North America would also lead global markets for the same period.
Growth Factors for 2023
The XR space has seen a meteoric rise in adoption rates across industry verticals. Education, entertainment, gaming, and training sectors have seen unprecedented growth in XR adoption. Additionally, XR has allowed businesses to leverage remote working with cloud computing technologies post-COVID.
After the pandemic, companies have dramatically improved the infrastructure to collaborate, work, and socialise while saving costs, time to market, and learning curves.
In healthcare, XR is a major pathway for computed tomography (CT) scanning and magnetic resonance imaging (MRIs). Doctors can leverage the technology to access detailed scans of patients in real-time with Magic Leap, HoloLens 2, and other headsets.
Healthcare officials can better serve their patients by diagnosing chronic illnesses using the technologies. Other verticals such as defence, travel, tourism, and retail also roll out lucrative plans for emerging technology solutions.
Furthermore, smartphone and 5G adoption rates will also continue to fuel XR market growth, the report noted. 5G technologies, along with edge and cloud computing, will facilitate the next generation of XR solutions for the enterprise.
Many companies such as Ericsson, Nokia, Huawei, and numerous telcos are incubating a strong ecosystem of XR solutions. This aims to develop novel platforms for smart glasses, application programme interfaces (APIs), and additional use cases across environments.
Other Contributing Factors
5G allows developers access to low-latency, low-bandwidth, and seamless connectivity to create and execute such programmes. All tethered and standalone headsets rely on connectivity for secure and reliable interactions.
The report adds that shared research and development (R&D) has created massive growth and innovation opportunities for developers.
The report explained that consumer and enterprise solutions had reached huge adoption rates for end-user segments. It added that onboarding, immersive developer support groups, and software developer kits (SDKs) would also boost XR services.
Finally, XR headsets have benefitted from innovations in gaming hardware, micro-OLED displays, haptic feedback controllers, and full-colour passthrough cameras.
Numerous gaming engines, including Unity Technologies and Epic Games, have become a mainstay for developing real-time 3D (RT3D) content.
Further platforms across Meta, ByteDance, ENGAGE XR, NVIDIA’s Omniverse, Autodesk, Decentraland, and many others remain instrumental to the Metaverse.
New Use Cases Post-Covid
With the rise of remote learning, educational institutions have adapted their teaching models to engage students with immersive curricula.
Many immersive education applications now exist on the market. Services like ENGAGE XR provide educators with tools to host immersive and interactive virtual classroom experiences. The firm works with influential groups like Stanford Uni to distribute its immersive learning tools.
Moreover, solutions are available that suit specific learning use cases. For example, GigXR provides MR healthcare training, Prisms provide VR STEM learning, and Seaberry distributes immersive welding training tools.
The enterprise environment uses XR in retail, healthcare, manufacturing, and many other sectors. Major high-street retailers like IKEA and Walmart are experimenting with AR applications to improve the buyer’s journey.
In-person immersive retail solutions also provide customers with a new avenue to engage with leading brands and digitally try-on clothing items before purchasing.
Industry 4.0 and the Industrial Metaverse
The industrial landscape is facing a new world with the rise of XR. Industry 4.0 solutions aim to alter the future of work by supplying frontline employees with rugged wearables that can survive harsh working environments.
However, many early adopters of this technology note an increase in productivity, reduced delays, and increased efficiency. Multiple firms such as NVIDIA, Siemens, and GE are experimenting with digitally-twinned factories to
Firms like Arvizio and RealWear are distributing immersive hardware and software which empower frontline workers with AR/VR/MR tools.
Challenges in XR Market Growth
Immersive reality technologies saw a significant boost from the arrival of Covid-19. The pandemic meant more people began searching for ways to connect outside face-to-face interactions and develop infrastructure to circumvent future disruptions.
Despite positive growth predictions, current market forces have substantially slowed XR growth for many tech giants. From November last year, the embattled XR market growth has faced major setbacks. This has included massive layoffs and reduced funding due to economic downturns and fallout from several high-profile collapses.
Global Regulatory Crackdown
Firms such as Silicon Valley Bank, Signature Bank, Silvergate Bank, and crypto platform FTX collapsed in months, severely impacting investment in XR. Federal Reserve rate hikes in the US have also triggered an avalanche of adverse investment sentiment due to lost revenues.
US authorities across the Securities and Exchange Commission (SEC) and New York Attorney General’s (NYAG) office have also cracked down on crucial Web3 and cryptocurrency platforms. This has led to tighter restrictions on monetisation and decentralised autonomous organisations (DAOs) critical to decentralised revenue streams.
With the current investment market winding down its post-COVID push, XR startups and big tech advocates now face a lack of sufficient funding to complete key XR projects.
Conversely, fraud has also fuelled negative market sentiment on the future of Web3. It has also renewed calls for greater oversight and standards to prevent cybercrime from taking place in the future.
Despite this, the report notes that high device costs continue to limit access to XR adoption from the study period. Some companies like Meta Platforms and Pico have lowered their device costs to reach a larger audience of headset users.