Executive Summary
It’s that time of year again. As we enter 2023, our annual exercise kicks in: examining the AR and VR events and lessons of the past year and predicting outcomes for the next year. The following pages will do just that… But first, what’s the high-level view of where we are in the XR lifecycle?
AR and VR – collectively known as spatial computing – continue to hold immense potential. Though they don’t represent the imminent tech revolution trumpeted in their circa-2017 hype cycle, they continue to show gradual progress. After a shakeout followed that hype cycle, AR and VR are now steadily growing at measured and realistic paces.
But the “spatial spectrum” deserves more nuanced analysis as there are varying growth curves across AR and VR subsectors. Those seeing the most commercial traction include AR marketing & commerce, as well as consumer VR. Meta continues to advance the latter with massive investments and loss-leader pricing for its flagship Quest 2, not to mention last year’s introduction of the Quest Pro.
Speaking of Meta, one thing that characterized spatial computing in 2022 – for better or worse – is metaverse mania. The term resurfaced in 2021 after several mini-hype cycles over the past 30 years. This time, the volume was amplified as the metaverse aligns with growth in AR and VR noted above… not to mention Meta’s highly-exposed investments. It spends $10 billion+ annually to accelerate its vision.
But as this metaverse hype cycle accelerates, there are mixed feelings among AR and VR proponents. On one hand, it brings exposure to their work, which translates to investor and consumer excitement. On the other hand, connection to the “m-word” clouds AR and VR in mainstream perception as being futuristic jargon. And they could get dragged down with any looming metaverse backlash or market correction.
Meanwhile, the metaverse – though it’s still in the process of being defined – is not monolithic. There are a few possible tracks along which it could develop. One is the more common connotation: 3D virtual spaces that host time-synchronized interaction between place-shifted participants. Today’s metaverse -like fiefdoms include multiplayer games like Fortnite and Roblox.
But the second track is potentially more valuable: a physical-world metaverse, where geo-anchored data triggers AR devices to evoke digital content where and when it’s relevant. This involves a multi-dimensional data mesh that enables an annotation layer for the world, or an Internet of places. We often refer to this as the metavearth, and a similar construct is known in spatial computing circles as the AR cloud.
Beyond Meta, others are investing in versions of the metaverse, including Google, Apple, Microsoft, and Niantic. They’re each driven to protect and future-proof their core businesses. But a by-product of these self-interested investments will be an accelerated AR
and VR ecosystem. And acceleration is needed for key steps including the transition from mobile to head-worn AR, and greater mainstream penetration for VR.
So where are we in that journey? What did we learn in 2022? And what’s to come in 2023 across the subsegments of the spatial spectrum? We dive into these questions and others through numbers, narratives, and concrete predictions. The goal, as always, is to empower you with a knowledge edge.
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MethodologyThis report highlights ARtillery Intelligence viewpoints, gathered from its daily in-depth market coverage. To support narratives, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Sources are linked or attributed in each case.
For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 17 years in tech-sector research and intelligence. This includes the past 7 years covering AR & VR exclusively, as seen in research reports and daily reporting.
This approach primarily applies a bottom-up forecasting analysis, secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating figures in a disciplined way. More about our methodology can be seen here, and market-sizing credentials can be seen here.
Disclosure & Ethics StatementUnless specified in its stock ownership disclosures, ARtillery Intelligence has no financial stake in the companies mentioned in its reports. The production of this report likewise wasn’t commissioned. With all market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. ARtillery Intelligence’s disclosures, stock ownership, and ethics policy can be seen in full here.
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