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Executive Summary

What’s the state of spatial computing? As we enter a new year, we embark on our annual exercise to define the sector, its players, events, and trajectory. This year, we ended up with almost 100 pages of analysis. To maintain our persistent goal to achieve analytical depth, we’ve split the report into two parts, rather than scale it back. The pages that follow represent Part 1, with Part 2 to follow next month.

As for findings, XR continues to push forward while its biggest players invest tens of billions collectively to realize their self-centric versions of a spatial future. But though self serving, these players accelerate XR in the aggregate as they fund the industry’s expansion, R&D, marketing, and consumer education.

For example, Meta’s spending spree in its Reality Labs division – though recently scaled back to a degree – has struck the right chord with Ray-Ban Meta Smartglasses (RBMS). The device balances technology and style in ways that meet consumers’ current XR appetites. In other words, they’re more eyewear than technology. This formula, though it has proved elusive to tech giants over the past decade, has been validated through RBMS consumer traction. The market has spoken, to the tune of 5 million+ lifetime units sold. Moreover, they’ve signaled a model for the right UX balance between visuals and AI.

Sticking with that last point, the intelligence and utility that AI brings to the table lessen AR’s reliance on visuals as a selling point. It rather offers intelligent functions such as personal alerts, social signals, shopping & commerce, and world annotation. This utility is met with the style and wearability that’s possible when you sidestep AR display systems.

But this AI-reliant and AR-lite approach isn’t a silver bullet. It’s just one of many paths being forged today. And that device divergence is a mark of an industry moving into adolescence. Indeed, a variety of purpose-built and app-dependent form factors will unlock value and greater appeal than the do-everything bulk that characterized AR’s previous generation of flagships. Where will those divergent paths take us? Who’s best positioned? And where do VR and mobile AR sit in all this? We’ll tackle these questions through numbers and narratives.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

Like many research & intelligence firms, one of the things that ARtillery Intelligence does is market sizing. A few times per year, we go into isolation and bury ourselves deep in financial modeling. This exercise takes the insights and observations we accumulate throughout the year and synthesizes them into hard numbers for the current and future spatial computing industry (methodology details here).

In covering spatial computing for eight years, our sector knowledge base and perspective continue to expand. That occurs on several levels, including insight and access to insider information, all of which informs our forecast models and inputs. Further reinforcing that knowledge position, the daily rigors of editorial production at our sister publication, AR Insider, emboldens our market insights. It also offers an invaluable asset for market-sizing work: access.

Beyond a knowledge position and market-sizing process, the focus of these forecasts likewise continues to evolve. Our first market forecast eight years ago examined AR, VR, and all their revenue subsegments (collectively, XR). More recently, we began to produce separate forecasts for headworn
and mobile AR, as well as VR. Though all three share technical underpinnings, their nuanced market dynamics deserve deeper and focused treatment.

But now the pendulum has swung back in the other direction. In addition to those focused drill-downs into spatial computing subsegments, we’re returning to a comprehensive XR forecast. Why? The idea is to reveal insights about how these interrelated sectors contrast and converge. For example, what’s the market opportunity for supporting tech (e.g., creation platforms) that span AR and VR? And what’s the comparative hardware penetration and device sales outlook across these form factors? This combined XR forecast allows us to tackle such questions.

So what did we find out? Starting at the top, XR revenue will grow from $24.8 billion in 2024 to $57.6 billion in 2029. Among XR form factors, VR leads with $13.5 billion in 2025, followed by mobile AR ($10.7 billion) and headworn AR ($4.6 billion).

Taking these one at a time – in the order of revenue share – VR’s lead is owed to its more established and technologically-mature state, relative to AR. It’s also propelled by Meta’s loss-leader investments to gain early market share and build a network effect. This was accelerated by Quest 3 and its younger sibling, Quest 3s, which both represent a new standard in VR devices that feature high-resolution color passthrough cameras for mixed reality. And the price is right. But though VR leads today, its sales are slowing as headworn AR – particularly flat AR and non-display smart glasses – ramps up (more on that in a bit).

Moving on to mobile AR, it has a healthy installed base of hardware as it piggybacks on global smartphone saturation. But that installed base doesn’t always translate to revenue. For example, consumer spending in mobile AR is relatively low. With the exception of in-app purchases in Pokémon Go (which are sustaining to a degree) and Snap’s new Lens+ subscription, most consumers aren’t yet paying for AR experiences. So if not from consumers, where is money being made in mobile AR? The short answer is B2B2C. This involves brand spending to create AR experiences for their customers. It includes AR marketing, commerce enablement, and experience creation software. There’s also a fair amount of B2B revenue in mobile AR, such as visually-guided productivity in industrial and corporate settings.

On to headworn AR, there continues to be ample anticipation for full-featured dimensional AR glasses (see device classes and definitions later in this section). But there’s also a looming reality check, given their technological and practical challenges. These barriers include cost, bulk and cultural resistance. With the exception of standouts like Snap’s upcoming consumer spectacles, these dimensional-AR challenges drive ‘lighter’ approaches.

For example, flat AR is inferior to dimensional AR in its visual UX, but can still be valuable in utilities such as messaging, POV viewfinders, and other forms of augmentation. These are experientially meaningful, even if graphically suboptimal. And one factor has unlocked value and functionality in these flat-AR approaches: AI. By making flat AR situationally intelligent, it brings it from underwhelming to utilitarian.

Speaking of which, similar factors define non-display AI glasses. Led by Ray-Ban Meta smart glasses (RBMS), the toned-down UX noted above is taken to another level by sidestepping visuals altogether. Moreover, this tradeoff of utility and style for visuals has been validated. The market has spoken… to the tune of 5 million+ cumulative units sold for RBMS. Sales momentum is also strong, while other players have begun to chase these validated demand signals. These include the emerging Android XR ecosystem, which could do for XR – across device classes – what Android did for the mobile ecosystem 15 years ago.

The bottom line is that after about a decade of ups and downs, the XR ecosystem could be facing another inflection. The difference this time is that the technology is more stable, and the go-to-market strategies are sounder.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

It’s that time of year again. As we approach 2026, our annual exercise kicks in: examining the spatial computing 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 spatial lifecycle?

Spatial computing continues to hold immense potential, but it also faces ample headwinds. After a hype-cycle and market correction almost a decade ago, spatial computing went through another boom and bust cycle with the rise and fall of “metaverse mania,” circa 2021. Now, after both these cycles – and the distractions that come with them – XR is growing at a refined and realistic pace.

But the “spatial spectrum” deserves more nuanced analysis as there are varying growth curves across AR and VR subsectors. These continue to diverge into independent and purpose-built evolutionary paths. For example, mixed reality continues to advance with video passthrough (VPT) capabilities in Meta Quest, Apple Vision Pro, and Samsung Galaxy XR. Optical see through (OST) is growing even faster, including non-display AI smart glasses (e.g., Ray-Ban Metas), video display glasses (e.g., VITURE Luma Pro), flat AR (e.g., Meta Ray-Ban Display Glasses), and dimensional AR (e.g., Snap Spectacles).

The key term is purpose-built, as XR devices map to deliberate use cases. This helps achieve utility and specialization, rather than overly broad approaches that don’t do anything well. This trend is meanwhile validated by key supporting players such as Qualcomm. The company is building a range of chips that map to varied device classes – from non-display AI glasses to UX-rich mixed-reality devices.

That brings us to the big topic that has defined the past two years, inside and outside of spatial computing: AI. Inflections in AI characterize today’s technological momentum. But the question is how AI intersects with XR. A common and reductive hot take is that AI replaces spatial computing as a source of funding and attention. And that may be true to a degree. However, on more meaningful levels, AI and XR elevate each other. XR can be the face of AI, while AI is the brains of XR. They complete each other.

This XR/AI convergence isn’t new, as seen in flavors and subsets of XR such as visual search (e.g., Google Lens). However, it developed new flavors and areas of applicability in 2025, such as Snap’s work with AI in Lens Studio to automate creator workflows. On the user end, AI can meanwhile elevate AR experiences such as line-of-sight situational intelligence. For example, multimodal AI in Ray-Ban Meta Smartglasses fuses visual inputs and audio outputs to make wearers smarter about the world around them.

AI’s integration in smart glasses also sparks another key trend in XR: the ability to sidestep visuals. By leaning on AI’s benefits and appeal, device manufacturers can lessen reliance on visuals – and all their design challenges – as a primary selling point. With that burden offloaded, devices can be sleeker, more style forward, and thus scalable.

But the story doesn’t end there. The spatial spectrum is broad with several moving parts. The burning questions as we enter 2026: What will be the impact of Meta Ray Ban Display Glasses? How will Snap’s consumer spectacles perform in 2026? Will Android XR bring scale to XR? And what will Apple end up doing in its AR glasses road map? We’ll address these questions and others as we break down 2025’s biggest lessons, and our predictions for 2026.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

At the end of each quarter of the calendar year, ARtillery Intelligence’s monthly report for its Pro subscribers takes form in an expansive market forecast. These four annual deliverables cover various subsegments of the “spatial spectrum,” including mobile AR, Headworn AR, VR, and cumulative XR. But given the velocity of some of these spatial sub sectors, we often return to these sectors mid-cycle to update and analyze the revenue outlook.

That is what we intend to do in this report. Specifically, we are revisiting the headworn AR segment of spatial computing that we last tackled in June. This includes AR glasses, smart glasses and their variants (see definitions and inclusions later in this section). Given recent moves from Meta, and anticipated moves in the near term from other influential players, there’s much to examine.

But rather than just re-publish our June forecast with updated numbers (which we also did), we want to go deeper. In other words, we’re layering in more dimension to projected revenue figures. Because there are myriad potential outcomes and contingent factors that impact the AR glasses market (cultural adoption, underlying capabilities, marketing execution, etc.), we have gamed out a few scenarios.

These scenarios take form in conservative, moderate, and optimistic projections, which define the structure of this report. Each of these sections provides not only projected figures but the context and drivers behind them. In other words, what market conditions will need to be in place for figures to be realized?

To further contextualize our intentions, the 3-track approach isn’t meant to be non-committal to a single market outlook, nor to hedge our bets. It’s rather to bring more depth and dimension to the forecasting process, and thus its strategic takeaways. The process itself uncovered several contingent factors that could sway the headworn AR market by billions of dollars.

Discovering, acknowledging, and anticipating those factors is strategically advantageous for XR players that are planning their own road maps, and gaming out market outcomes. As they say, success is a combination of luck and preparedness. This report hopes to inspire and engender the latter.

Price: $1999

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO (Startup tier or higher for forecast access). You can also purchase it a la carte.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

Like many research & intelligence firms, one of the things that ARtillery Intelligence does is market sizing. A few times per year, we go into isolation and bury ourselves deep in financial modeling. This takes the insights and observations we accumulate throughout the year and synthesizes them into hard numbers for the current and future spatial computing industry (methodology details here).

In covering spatial computing for eight years, our sector knowledge and perspective continue to expand. That occurs on several levels, including insights and access to insider information, all of which informs our forecast models and inputs. Further reinforcing that knowledge position, the daily rigors of editorial production at our sister publication, AR Insider, embolden our market insights. This also uncovers a steady flow of forecast inputs.

Beyond knowledge position and market-sizing processes, the focus of these forecasts likewise continues to evolve. Our first market forecast seven years ago examined AR, VR, and all their revenue subsegments (collectively, XR). Since then, we’ve evolved towards separate forecasts for headworn AR, mobile AR, and VR. Though all these areas share technical underpinnings, their nuanced market dynamics deserve deeper and focused treatment.

Accordingly, this report focuses on VR. Given its unique dynamics – in both technology and user adoption patterns – it compels its own focused analysis. This allows us to go deeper into key revenue sources like consumer (B2C), enterprise (B2B), and AR-enablement software (B2B2C). We did this in Q1 for mobile AR, Q2 for headworn AR, and we’ll do the same in Q4 for the collective XR market.

So what did we find out? Global VR revenue is projected to grow from $12.2 billion in 2024 to $18.9 billion in 2029, a 9.12 percent compound annual growth rate. This leads other XR sectors, such as mobile and headworn AR. Though VR continues to face market challenges and slow growth, it’s the most established of these XR subsegments.

Segmenting the above VR estimates, revenue is bisected by consumer and enterprise markets. Though consumer spending is somewhat strong –inheriting some demand and market dynamics from the robust gaming industry – enterprise spending has pulled ahead. This is mostly due to VR’s capacity for immersive training, which demonstrates favorable efficacy and efficiency. Starting with the former, VR’s visceral and experiential qualities elevate muscle memory and informational recall. As for efficiency, VR simulations drive cost reductions versus physical training methodologies, including equipment usage and travel costs to physically interact with training pros and settings. After all, atoms cost more than bits.

Companies ranging from Coca-Cola to Walmart to Bank of America have realized these advantages and invest in large-scale VR training programs. They’ve validated meaningful savings and greater effectiveness, which is a strong value proposition for adoptive enterprises that will grow in number.

Beyond consumer and enterprise segmentations, VR revenue can be bisected by hardware and software. For several years, hardware had a greater revenue share, as is often the case when new tech sectors emerge. But once a hardware installed base is established, software accelerates and eventually eclipses hardware spend. That happens as software builds on that larger installed base of hardware, and enjoys recurring revenue cycles (think: SaaS), that outpace hardware replacement cycles.

This historical pattern is precisely what we’ve seen in VR. And we are now at the stage when software revenue has eclipsed hardware in the aggregate. In addition to factors noted above, software spending is lifted by growing areas like consumer in-app-purchases (B2C), device management programs (B2B), and LBVR content/game licensing (B2B2C).

But it’s not all good news. As this report publishes at the end of Q3 2025, signs so far this year aren’t strong for consumer VR adoption. This troubling trend can be detected in primary signals that we track, such as Meta’s quarterly earnings. That attrition is partly due to market saturation for Meta’s latest hardware generation (Quest 3 and 3s). It’s also due to demand that has shifted from VR to emerging XR device classes such as screen-mirroring display glasses.

These competing devices from the likes of Xreal and VITURE offer large private screens for 2D entertainment like games & movies. Though VR can accomplish more dimensional experiences, these 2D experiences account for a meaningful share of VR usage.* And they’re now offered in a sleeker form factor. These screen-mirroring display glasses are tracked in our corresponding headworn-AR forecast.

So how do all these principles translate to revenue projections? That’s what we’ll quantify and qualify throughout this report…

Price: $1999

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO (Startup tier or higher for forecast access). You can also purchase it a la carte.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

AR continues to evolve and broaden into several use cases and value propositions. These represent standalone topics in ARtillery Intelligence’s ongoing analysis, including monthly reports like this. For example, prominent AR sub-sectors include industrial AR, consumer VR, and the rise of AI smart glasses.

Existing alongside these central topics is another AR subsegment: immersive marketing. This opportune area includes sponsored AR lenses that let consumers interact and engage with brands, or virtually try on products. And though the future of AR is headworn, we’re mostly talking about AR marketing on smartphones. That’s where the scale lies… and brand marketers are all about scale.

Meanwhile, driving immersive marketing are several components. For example, lens creation software arms brands and developers with low-code tools to author AR experiences. Social networks like Snapchat and Instagram likewise offer the additional ability to amplify lenses throughout their social graphs. That paid amplification was estimated to drive $1.5 billion in brand spending last year, and is projected to grow to $2.2 billion by 2029.

The factors driving this brand spending include advertisers’ growing affinity for, and recognition of, AR’s potential. Its ability to demonstrate products in immersive ways resonates with their creative sensibilities, transcending what’s possible in two-dimensional formats. There’s also a real business case. That can be seen in the performance metrics that often flow from AR marketing campaigns.

The performance metrics noted on the previous page were analyzed in past volumes of this report series. And we now continue the narrative with another round of case studies – the fifth volume in total. As in past volumes, the goal is to explore not only the what and why of AR marketing – well-worn topics – but also the how. This takes shape in AR campaign breakdowns. What’s working and not working in these early stages while the AR marketing playbook is still being written?

Another ongoing theme carried forward in this report is how AR marketing can map to brand marketers’ varied goals. This builds on AR’s versatility and its unique ability to span the consumer purchase funnel – from upper-funnel reach to lower-funnel conversions.

Case studies in this report will accordingly span these funnel stages. Similarly, we’ll examine varied and evolving analytics. In fact, a looming question in AR marketing is what are the best metrics to track effectiveness? This will be a moving target.

As a bonus, ARtillery Intelligence has created a library of AR ad campaigns. Known as Campaign Tracker, it lives on ARtillery Pro (login required). It includes AR ad campaigns at-a-glance and in-depth. It’s meant to supplement this report with all-year education in AR marketing execution and best practices. As always, the goal is to empower you with a knowledge edge.

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Methodology

This 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, when necessary, properly-sourced third-party data.

For market sizing and analysis, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 20 years in tech-sector research and intelligence. This includes the past 10 years covering AR & VR exclusively, as seen in research reports and daily reporting.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about our methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

How do consumers feel about mobile AR? Who’s using it? How often? And what do they want to see next? Perhaps more importantly, what are non-users’ reasons for disinterest? And how should app developers build mobile AR experiences accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be fielded to more than 50,000 U.S. adults through Thrive’s established consumer survey engine. As the ninth wave of this mobile AR research, the results are in and we’ve synthesized the takeaways throughout this report.

This follows several ARtillery Intelligence monthly reports that examine various segments of, and developing use cases for, consumer AR experiences that happen on smartphones. Now a deeper view into consumer usage and attitudes validates those narratives while providing new dimension into mobile AR strategies and opportunities.

So what did we find out? At a high level, mobile AR usage has grown to 39 percent of U.S. adults, up from 35 percent in the previous survey wave. Many of these users experience AR through apps, such as those built on Apple’s ARKit and Google’s ARCore. But there’s also growing engagement with lower-friction experiences such as web AR.

Mobile AR users also appear active and engaged, with 46 percent reporting that they use it at least weekly. The top app category is gaming, which we attribute to Pokémon Go’s sustained traction, even after it has gone a bit quiet in terms of press attention. But other categories such as AR shopping, social interaction, and visual search continue to make headway.

Beyond the positive results and demand signals outlined on the previous page, there are negative signs and areas for improvement. For example, mobile AR non-users report low likelihood of adopting, and an explicit lack of interest in the technology.

This disparity between current-user satisfaction and non-user disinterest continues to underscore a key challenge for AR: you need to experience it to see its benefits. But there’s little motivation for non-users to do so. This creates a classic “chicken & egg” dilemma that represents a core marketing challenge for AR.

Put another way, AR’s highly-visual and immersive format is a double-edged sword. It can create strong affinities and high engagement levels. But the visceral nature of its experience can’t be communicated to prospective users through traditional marketing, such as ad copy, images, or even video.

The same chicken & egg challenge was uncovered in the corresponding VR consumer research that we published in Q2. This makes it a common challenge for immersive tech, though mobile AR is relatively advantaged by smartphone ubiquity. Still, it will take time and acclimation before AR reaches a more meaningful share of the population.

Meanwhile, there are strategies to accelerate that process and to build AR apps that align with consumer affinities. And these strategies will be a moving target as AR evolves from mobile – the predominant form factor today – to its endgame: headworn. We will end this report with data that quantify the early stages of this transition from handheld to headworn AR.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in the tech sector. This includes the past 10 years covering AR & VR as a primary focus.

ARtillery Intelligence has partnered with Thrive Analytics by writing the questions for the Virtual Reality Monitor consumer survey. These questions were fielded to more than 50,000 U.S. Adults. ARtillery Intelligence wrote this report, containing its insights and viewpoints on the survey results.

For market sizing and analysis, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 20 years in research and intelligence in the tech sector. This includes the past 10 years covering AR & VR exclusively, as seen in research and daily reporting.

Thrive Analytics likewise follows best practices in consumer research, developed over its long tenure as a consumer research firm. More details about the survey sample can be seen in this report’s introduction, and more on ARtillery Intelligence’s research methodology can be read here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

Like many research & intelligence firms, one of the things that ARtillery Intelligence does is market sizing. A few times per year, we go into isolation and bury ourselves deep in financial modeling. This takes the insights and observations we accumulate throughout the year and synthesizes them into hard numbers for the current and future spatial computing industry (methodology details here).

In covering spatial computing for eight years, our sector knowledge and perspective continue to expand. That occurs on several levels, including insights and access to insider information, all of which informs our forecast models and inputs. Further reinforcing that knowledge position, the daily rigors of editorial production at our sister publication, AR Insider, embolden our market insights. This also uncovers a steady flow of forecast inputs.

Beyond knowledge position and market-sizing processes, the focus of these forecasts likewise continues to evolve. Our first market forecast seven years ago examined AR, VR, and all their revenue subsegments (collectively, XR). Since then, we’ve evolved towards separate forecasts for headworn AR, mobile AR, and VR. Though all these areas share technical underpinnings, their nuanced market dynamics deserve deeper and focused treatment.

Accordingly, this report focuses on headworn AR. Given its unique dynamics – in both technology and user adoption patterns – it compels its own focused analysis. This allows us to go deeper into key revenue sources like consumer (B2C), enterprise (B2B), and AR-enablement software (B2B2C). We did this last quarter for mobile AR, as we’ll do next quarter for VR, and in Q4 to end the year with the entire XR sector.

So what did we find out? Headworn AR revenue is projected to grow from $2.61 billion in 2024 to $13.05 billion in 2029, a 37.92 percent compound annual growth rate. This trails other XR sectors we track, such as mobile AR and VR, as they’re at more advanced stages. Though headworn formats represent AR’s endgame, they’re at earlier lifecycle stages today, due to highly-advanced underlying tech.

All the above has inspired some rethinking and alternative approaches within the XR industry. Full-featured AR glasses face technological challenges such as nuanced optical and display systems, device bulk, and cost. So going back to the drawing board in search of modalities that appeal to larger markets, some XR players came up with a different approach: lower-immersion smart glasses.

Meta is credited with sparking and validating this approach with Ray-Ban Meta Smartglasses. The device has sold 2 million+ lifetime units as of this writing, driven by a stylish form factor and toned-down AR features. In fact, they have no display system at all, relying instead on camera inputs that inform audible outputs (a.k.a., multimodal) – all fueled by AI.

That brings us to AR’s force multiplier. AI will enable these non-display form factors to be functional and engaging. Intelligent assistants and situational awareness – even if delivered by audio – replace visuals as AR’s selling point in some cases. This will be followed by simple displays for flat visuals from Meta and others. In each case, the key is devices that are experientially meaningful, even if graphically underpowered. AI was the key to unlock this endpoint, led by Ray-Ban Meta Smartglasses. And the demand that Meta has validated attracts other tech giants to the table, including Apple and Google.

But while these nearer-term mass-market moves are underway, the above players have one eye on the longer-term future: more immersive AR glasses. This includes Meta Orion – currently in prototype phases, as well as Snap’s streamlined Specs launching next year. The latter will hit the market as Snap’s first consumer version of its lauded and erstwhile developer-only Spectacles Gen 5. It will be a key moment in beginning to scale tier-1 AR glasses.

As all the above consumer dynamics materialize, visually-rich headworn AR has found traction in the enterprise. For example, it helps IT field reps operate with greater speed and effectiveness through line-of-sight guidance and remote support. Similar service, maintenance, and assembly use cases exist across high-value verticals – from agriculture to aerospace.

Speaking of enterprise adoption, it not only happens in a B2B sense but with B2B2C. We’re talking consumer endpoints such as games, entertainment, marketing, and commerce. The technology to create and support these functions is adopted by developers and brands who lean into AR as an interactive touchpoint with their customers or marketing targets.

But how do all these dynamics translate to revenue? That’s what we’ll quantify throughout this report…

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in tech sectors. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory, and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. More about ARtillery Intelligence’s market-sizing methodology can be seen here and more on its credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

How do consumers feel about VR? Who’s using it? How often? And what do they want to see next? Equally important, what are non-users’ feelings about the technology? Why aren’t they using it? What would change their minds? And how can VR software and hardware developers optimize products accordingly?

These are burning questions we set out to answer. Working closely with survey research specialist Thrive Analytics, ARtillery Intelligence wrote questions to be fielded to 50,000 U.S. adults through Thrive’s established consumer survey engine. The results are in and we’ve analyzed the takeaways in this report.

This follows similar reports we’ve completed over the past decade, including a corresponding consumer AR survey. Wave 9 of the research now emboldens our perspective and brings new insights and trends to light. All nine waves represent a significant sample of U.S. adults for robust longitudinal analysis. This will continue to expand with each survey wave.

So what did we find out? At a high level, 27 percent of U.S. adults own or have used a VR headset, which is up from 25 percent in Wave 8. Though this is modest growth, the product category is expanding and reaching more meaningful consumer penetration.

This growth is driven by a few factors, including the emergence of mixed reality in VR. As seen in market-defining hardware such as Meta Quest 3 and 3s – as well as high-profile devices like Apple Vision Pro – mixed reality involves HD color passthrough cameras that enable experiences that interact with the real world. In addition to being more capable and immersive, passthrough cameras can engender comfort, orientation, and spatial awareness in VR.

But beyond those positive signals, there continue to be challenges and adoption headwinds. VR hasn’t lived up to its world-changing hopes and promises touted in the industry’s circa-2017 hype cycle… nor its circa-2021 metaverse hype cycle. Since then, VR has been healthy in its own right, but far narrower in consumer adoption than proponents have hoped.

The causes of those adoption challenges are signaled in these survey results. For example, only 20 percent of non-users say that they want to try the technology. Though existing users show strong demand signals and engagement, there’s a clear delineation in overall sentiment between VR users and non-users.

The disparity between current-user engagement and non-user disinterest underscores a key “chicken & egg” dilemma for VR. To reach high satisfaction levels, VR must first be tried. Yet non-users, per the above, have little interest in doing so. Altogether, this presents a sizable marketing challenge for VR players and proponents to convert non-users into users.

But if anything is going to bring that interest to mainstream markets, it’s the aggressive pricing and quality of Meta devices. In an effort to blitz market share, Meta subsidizes its hardware to the point of deflating its own margins. The good news for consumers is that they get access to quality VR hardware that’s more affordable than it should be.

These factors continue to attract users, which then attract developers. As game & app libraries build in this way, a virtuous cycle – or flywheel effect – drives the VR market. This is the path to VR growth. But to be clear, it will continue to be a gradual process as VR ratchets up slowly and steadily in the above ways.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in the tech sector. This includes the past 10 years covering AR & VR as a primary focus.

ARtillery Intelligence has partnered with Thrive Analytics by writing the questions for the Virtual Reality Monitor consumer survey. These questions were fielded to more than 50,000 U.S. Adults. ARtillery Intelligence wrote this report, containing its insights and viewpoints on the survey results.

For market sizing and analysis, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 20 years in research and intelligence in the tech sector. This includes the past 10 years covering AR & VR exclusively, as seen in research and daily reporting.

Thrive Analytics likewise follows best practices in consumer research, developed over its long tenure as a consumer research firm. More details about the survey sample can be seen in this report’s introduction, and more on ARtillery Intelligence’s research methodology can be read here.

Disclosure & Ethics Statement

Unless 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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Executive Summary

One health indicator in any tech sector is the venture funding that flows into it. It signals confidence levels from the stakeholders who have the most to gain – and lose – from it. Due to those high stakes, good investors tend to have among the deepest knowledge of a given tech category. Through the process of diligence, they’re forced to know it intimately. Therefore, in the aggregate, the funding they commit to a given sector can be a reliable confidence signal. Beyond confidence, venture investing itself fuels the sectors that it enters – thereby accelerating growth.

The XR industry is no exception to these dynamics. Its venture-funding ebs and flows map to its fluctuating health. Within the current era of XR – starting with Meta’s 2014 acquisition of Oculus – we’ve seen a few such boom & bust cycles. The first was the circa-2017 period of elevated investment, which led to a shakeout and market correction from 2018-2020. Things picked back up in 2021, driven by a combination of the Covid software boom and the phenomenon we call “metaverse mania.”

The correction that then followed was amplified by a few factors. The first was the hangover from the Covid software boom, which dampened venture funding in general. The second was the rapid rise of AI, which sucked all the air out of the room in terms of investor interest. That trend continues to this day.

As all this unfolded, the fall of the metaverse dragged XR down with it, given its association and adjacency. This puts XR startups in a challenging spot, as reported by several that are currently fundraising. For example, Lynx CEO Stan Larroque characterized the funding environment in mid-2024 as “excruciating.”

But to quantify the XR environment more precisely, how much venture funding flows into it, and how does that break down by category, stage, and deal size? This report quantifies these variables through original data, using full-year 2024 as a baseline. But rather than a standalone analysis, this represents a new series. The goal is for insights to elevate with each annual exercise, including longitudinal perspective and trend data. Until then, we’ve aggregated third-party figures for trending data that precede 2024.

This report unpacks and analyzes the results, pursuant to a reliable reading on XR sector health.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 20 years in research and intelligence in the tech sector. This includes the past 10 years covering AR & VR as a primary focus.

This report focuses on XR funding. To accomplish this, ARtillery Intelligence developed a tracking mechanism known as Funding Watch to monitor XR funding activity throughout the year. Starting in calendar-year 2024, this includes a combination of automated and manual scanning of public sources that report funding activity. It then processes, segments, and analyzes resulting data for the production of this report. Given the knowledge that a portion of funding activity is unreported, we extrapolate an additional dollar amount to cover the gap. For data that precedes 2024 – used in trending analysis, for example – we utilized third-party resources that report annual XR funding data.

Beyond input data and calculations, the narrative insights that populate this report flow from ARtillery Intelligence’s XR knowledge position and analytical license. More about our methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure & Ethics Statement

Unless 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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