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Executive Summary

Back in August, ARtillery Intelligence’s monthly report focused on smart glasses. Given new standards set by Ray-Ban Meta Smartglasses, Xreal Air 2 and others, the device class is seeing demand inflections. Much of this success is built on the principle of “lite AR.”

After a decade of chasing “heavy AR” ambitions, many XR players got realistic about the technology’s shortcomings. They’ve consequently designed today’s best version of the technology, rather than trying and failing to achieve overly-ambitious ends. This meant simple non-interactive visuals… or no visuals at all.

Following that narrative, we now embark upon the next chapter: heavy AR. This is defined by visual AR that understands and interacts with its surroundings in dimensionally-accurate ways, otherwise known as simultaneous localization and mapping (SLAM). These scene-interaction and dimensionality functions are computationally intensive, which makes heavy AR challenging… or “ambitious” as characterized above.

These challenges boil down to design tradeoffs. For example, SLAM requires ample graphical processing, power, and display systems, which collectively amplify device cost and bulk. Those two attributes, in turn, preclude a large segment of the market: consumers.

Though these challenges persist, we’re starting to see notable evolution. In the past quarter alone, hardware from Snap and Meta advanced heavy AR standards. Snap Spectacles offer a dimensional AR experience in a package that – though bulky – is a step closer to something that’s stylistically viable for consumer markets. For now, it’s only available to developers as Snap knows we’re not there yet.

Meanwhile, Meta’s Orion is a glimpse of the future, seen through the extent of AR technical achievement that’s possible today. Though it’s a working prototype for internal development, it demonstrates to the broader public where AR is headed, and what’s possible.

With that contextual backdrop, this report will focus on seethrough AR glasses-based heavy AR. It will do so on mostly business – rather than technical – levels. Where is it today, and where is it headed? What recent market events define that trajectory? And who’s doing what to advance and accelerate the field? We’ll tackle these questions through numbers and narratives, with the end goal – as always – 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 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’ 18 years in tech-sector research and intelligence. This includes the past 8 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 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 six years ago examined AR, VR, and all their revenue subsegments (collectively, XR). More recently, we began to produce 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 specifically on VR. Specifically, global VR revenue is projected to grow from $11.02 billion in 2023 to $19.75 billion in 2028, a 12.37 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-to-moderate growth, it’s the most established of these XR subsegments.

Segmenting the above VR figures, revenue is bisected by consumer and enterprise markets. Though consumer spending is 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. In other words, atoms cost more than bits.

Companies ranging from Coca-Cola to Walmart to Bank of America have realized these advantages and invest heavily in large-scale VR training programs. They’ve validated meaningful savings and greater effectiveness. Consequently, VR training leaders like Strivr and ARuVR monetize the opportunity – which informs the market-sizing throughout this report.

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 sizable 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 the emerging VR sector. And we are now at the stage when software has eclipsed hardware as a revenue category. In addition to the factors noted above, software spend is lifted by growing areas like game subscriptions (B2C), device management programs (B2B), and LBVR content/game licensing (B2B2C).

Lastly, hanging over all the above is the market acceleration born from Meta’s massive investments. This not only includes tens of billions in R&D but loss-leader pricing in its hardware, such as Quest 3, as it builds towards longer-term goals and a network effect. The result is lower barriers to adoption and benefits to end-users. This is currently VR’s biggest accelerant.

So how do all these principles translate to revenue projections? That’s what we’ll quantify and qualify 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’ 18 years in research and intelligence in tech sectors. This includes the past 8 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

Smart glasses have seen their ups and downs – from the early excitement around Google Glass, to the the device’s famous flameout. The before-its-time and identity-confused device has since become a cautionary tale and the butt of jokes throughout the AR land. But that cautionary tale ended up serving the market well, leading to the evolutionary point where we now sit. Though there’s still miles to go, the past year has seen a noticeable inflection in excitement, investment, and market reception for smart glasses.

This inflection has involved a few factors. The first factor is that the broader XR world has begun to get more realistic. After spending a decade obsessed with an overly-ambitious vision that achieves graphical richness and wearability, smart glasses are beginning to be self aware that they can’t do both (yet). So we’ve instead seen more narrow, focused, and purpose-built use cases. They contrast the previous standards in hardware like Microsoft HoloLens 2 and Magic Leap 2 – venerable devices in their own right, but lugging do-everything bulk that only works for enterprises.

One example of this focused approach is Xreal Air 2. It’s built for the single purpose of private massive virtual screens for gaming and entertainment. This is not only focused, but it targets a use case that’s relatable and resonant with a large consumer market. Our survey data support that notion.*

The second factor is AI. Its ability to infuse intelligent and personalized assistant functions takes the burden off visuals as a central smart-glasses selling point. The result is experiences whose value lies not in graphical intensity but in the personalization and relevance of the information being delivered. This includes personalized alerts, social signals, and identifying people & things via text and audio. This is more about information than optics. It’s experientially meaningful, even if graphically underpowered.

And without all those optical requirements, smart glasses can achieve erstwhile elusive targets: style and comfort. The device that best applies these principles is Ray-Ban Meta smart glasses. Besides upgraded and well-integrated audio quality and video capture, multimodal AI is a central selling point. It can identify and contextualize real-world objects using visual input and voice output. It doesn’t even have a display system.

All the above boils down to the art of the possible. The device does its best with today’s available tech while offering a bridge to the fully-actualized smart glasses we really want. That end goal includes immersive optics and style in the same package. But until we get there, today’s smart glasses are starting to be honest with themselves about what they can and can’t do. And that honesty is baked into their design – leaning into the best of what’s possible today.

In the meantime, Apple Vision Pro looms over everything, showing what’s possible at the other extent of the UX spectrum. This practically achieves a few things. First, it could popularize immersive streaming and entertainment, thus stimulating demand for more affordable flavors… such as Xreal Air 2.

The second thing Vision Pro achieves is to represent smart glasses’ counterpart at the the other end of the experiential spectrum. That spectrum involves a sliding scale between UX and style/comfort, as noted. The desired outcome is for these two endpoints to someday meet in the middle for the best of both worlds. It will take several years to achieve this, but we’ll see worthwhile technology along the way, including the latest batch of smart glasses.

That’s what we’ll venture to examine in this report, including trend analysis, market projections, and reviews of the most notable devices. The goal, as always, 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 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’ 18 years in tech-sector research and intelligence. This includes the past 8 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 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

Most AR and VR commentary focuses on consumer markets. But consumer XR ubiquity is years or even decades away. This timeline is due to the state of the underlying technology and the design challenges in building hardware that’s graphically-robust and stylistically viable. Both factors are needed for consumer markets… yet both can’t be achieved today in a single device. Some innovators sidestep this dilemma with hardware that’s experientially-meaningful without graphical richness, such as Ray-Ban Meta Smartglasses (the topic of an upcoming report).

But while those workarounds and forward steps are being made in the consumer realm, XR finds fertile ground in the enterprise. Among other things, there’s less stylistic resistance in professional settings. More importantly, there’s a clearer business case for enterprise XR, such as productivity gains from line-of-sight guidance, or greater efficacy and efficiency in immersive training. These deployments span industrial settings (e.g., manufacturing) as well as corporate environments (e.g., design collaboration).

Specific use cases include AR visualization to support assembly and maintenance. It can also include visual guidance for IT field support. The idea is that AR’s line-of-sight orientation can make front-line workers more intelligent and empowered. Compared to the mental mapping they do with 2D instructions, visual support boosts effectiveness and safety while lessening cognitive load. And with VR, immersive experiences can boost memory recall and experiential learning in training scenarios across several job types.

In all the above modalities, benefits include speed, accuracy, and safety. These micro efficiencies add up to worthwhile bottom-line impact when implemented at scale. Macro benefits meanwhile include lessening job strain and the “skills gap” – all of which can help enterprises preserve institutional knowledge. But it’s not all good news. Though enterprise XR benefits are valid, several roadblocks stand in their way. These include organizational inertia, politics, bureaucratic systems, security concerns, and fear of new technology throughout a given enterprise.

Sticking with some of those organizational hurdles, the result is often the dreaded “pilot purgatory.” As its name suggests, this is when XR is adopted at the pilot stage, but never progresses to full deployment. It’s one of enterprise AR’s biggest pain points today. Fortunately, there are tactics – most of them involving internal communications and change management rather than technological matters. In other words, sometimes it’s more about HR than XR…

With that backdrop, we continue the ongoing strategic narrative around enterprise XR in this report. This includes original ARtillery Intelligence market-sizing data, as well as new enterprise survey research we’ve assembled from HTC. Moreover, we devote the bulk of this report to “show rather than tell” through case studies that demonstrate enterprise AR’s ROI potential and best practices.

To adequately represent these factors, we’ve reached out to leading enterprise XR players to collect their top case studies. We’ve then relayed these through our own lens and analytical rigor. We’ve prioritized case studies that have quantifiable results, actionable takeaways, and a wide range of business verticals.

The goal in all the above is to reveal the why and how of enterprise XR. Through the lens of industry best practices, why should enterprises invest in XR? And how should it be implemented? The name of the game is to set up enterprise XR to succeed by deploying it from a place of confidence and knowledge.

Price: $999

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO. You can also purchase it a la carte.

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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 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’ 18 years in tech-sector research and intelligence. This includes the past 8 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 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 six years ago examined AR, VR, and all their revenue subsegments (collectively, XR). More recently, we began to produce 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 specifically 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 the same earlier this year for mobile AR.

Headworn AR revenue is projected to grow from $1.86 billion in 2023 to $5.34 billion in 2028, a 23.52 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 underdeveloped today, due to highly-advanced underlying tech.

Meanwhile, there’s ample anticipation for AR glasses in the tech press and broader culture… but also a looming reality check. Futuristic visions of all-day AR glasses hit a wall given technological requirements. Not only are these needs intense – involving nuanced optical and display systems – but stylistic viability adds another layer of complexity. AR glasses’ ubiquity is more of a 2030 reality than a 2024 one. But if anything could accelerate that, it’s immense R&D spending from Apple, Meta, and others.

Zeroing in on the most influential of these players, Apple will advance AR adoption with its “halo effect,” flowing from Vision Pro. Its market impact will take several years, due to its price, but it will be influential in bringing AR to a broader segment of enterprises and consumers (in that order). Meanwhile, a new class of low-immersion smart glasses – such as Meta Ray Ban Smartglasses – shows what can be done by leaning on AI as opposed visuals and holography.

As all of the above consumer endpoints materialize, headworn AR has already found traction by helping industrial and corporate enterprises boost productivity. For example, it helps IT services field reps operate with greater speed and effectiveness through line-of-sight guidance and remote support.

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 bought by developers and brands who lean into AR as an interactive touchpoint with their customers or marketing targets. This principle is playing out in mobile AR, such as branded AR lenses, but will follow in headworn AR as the field evolves.

This progression will take a while due to low headworn AR hardware penetration, but we’ll prepare for such market opportunities by beginning to project B2B2C spending in this forecast. With evolving AR hardware from Apple, Meta, and others, B2B2C revenue models could develop in the next few years.

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’ 18 years in research and intelligence in tech sectors. This includes the past 8 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 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 52,325 U.S. adults through Thrive’s established consumer survey engine. As the eighth 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 35 percent of U.S. adults. Many of these users experience AR through apps, such as those built on Apple’s ARKit and Google’s ARCore. But there’s greater engagement with lower-friction experiences such as “AR-as-a-feature.”

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 or even video.

The same chicken & egg challenge was uncovered in the corresponding VR consumer research that we published last month. 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.

Price: $999

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’ 18 years in research and intelligence in tech sectors. This includes the past 8 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 52,000 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’ 18 years in research and intelligence in the tech sector. This includes the past 8 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 research methodology can be read here.

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? Perhaps more importantly, what are non-users’ feelings about the technology? What are their reasons for disinterest? And how can VR software and hardware developers optimize products accordingly?

These are questions we set out to answer. Working closely with survey research specialist Thrive Analytics, ARtillery Intelligence wrote questions to be fielded to 52,317 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 eight years, including a corresponding consumer AR survey. Wave 8 of the research now emboldens our perspective and brings new insights and trends to light. All eight 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, 25 percent of U.S. adults own or have used a VR headset, which is the same amount reported in the previous survey wave. Though this is flat growth – which is supported by our separate VR market sizing that shows a soft VR market over the past year – there are several signs that things will pick up in the coming year.

Those signs include the emergence of mixed reality in VR. As seen in market-defining hardware such as Meta Quest 3, this involves high-definition color passthrough cameras that enable experiences that interact with the real world – or simply engender comfort, orientation, and spatial awareness in VR. This survey was fielded prior to Quest 3’s launch, but it will be something to watch going forward.

The same can be said for Apple Vision Pro. Though it’s a device we characterize in the AR hardware category, the lines are blurring, and it will have an impact on stimulating mixed reality demand, congruent with Apple’s signature “halo effect.”

But beyond those positive and optimistic signals, there continue to be challenges and adoption headwinds in VR. It hasn’t been the world-changing and revolutionary technology it was touted to be in the industry’s circa-2016 hype cycle. Since then, it has been healthy in its own right, but far narrower in its consumer adoption than proponents had hoped.

The cause of those adoption challenges is signaled in these survey results. As we’ll explore in this report, only 26 percent of respondents say that they want to try the technology. Though this is up six points from the previous survey wave – supporting VR’s near-future growth as noted on the previous page – bad news lies in the reasons for disinterest. Specifically, 82 percent of those uninterested respondents say that they’re “just not interested.” This definitive and deflating statement signals that VR proponents have their work cut out for them in converting non-users.

Moreover, the disparity between current-user satisfaction 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 trying it. Altogether, this presents a sizable marketing challenge for VR players and proponents to push that first taste.

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 gain an early market share lead and a network effect, Meta subsidizes its hardware to the point of deflating its own margins. The good news for consumers is that they get quality VR hardware that’s much 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 self-propelling flywheel effect – drives the VR market forward. This is the path to VR growth. But to be clear, it has been – and will continue to be – a gradual climb. This can be seen in the live market evidence that surrounds us, further supported in the results of this survey research.

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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 8 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 52,000 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’ 18 years in research and intelligence in the tech sector. This includes the past 8 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 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 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 six years ago examined AR, VR, and all their revenue subsegments (collectively, XR). We still produce that broader forecast, but also do separate forecasts for headworn AR, mobile AR, and VR. Though they share technical underpinnings, their nuanced market dynamics deserve deeper and focused treatment.

We continue to double down on that segmentation by focusing this report on mobile AR. Given its leading revenue position among AR segments, and its hardware installed base, it compels its own focused analysis. This allows us to go deeper into key revenue sources like consumer, enterprise productivity, brand marketing, and commerce enablement. We’ll do the same later this year for head-worn AR and VR.

So what did we find out in this forecast? Mobile AR revenue is projected to grow from $10.5 billion in 2023 to $21.5 billion in 2028. In fact, mobile AR revenue today exceeds other XR sectors we track, such as headworn AR and VR, as it piggybacks on a global base of 3.6 billion smartphones.

But that installed base doesn’t always translate to revenue. For example, consumer spending in mobile AR is relatively low, including digital goods such as in-app purchases in Pokémon Go. Though the game is still performing relatively well, it’s a bit of an outlier as most consumers aren’t otherwise paying for AR experiences. Those that do mostly execute in-app purchases – an established and comfort-advantaged behavior due to its firm footing in mobile gaming. But consumers largely aren’t buying AR apps.

Consumers are however buying physical goods with the help of AR. This involves AR product visualization and try-ons that add more dimension and consumer confidence in eCommerce consideration phases. This has resonated with consumers – especially the camera-native generation Z – as well as brands and retailers. These entities have meaningfully adopted AR in their marketing, as it helps them to demonstrate products with greater detail and dimension. And that’s where most spending occurs in mobile AR.

This brand adoption represents an area of AR spending we classify as B2B2C. It involves brands that utilize AR to create experiences for their customers or marketing targets. Put another way – and synthesizing a few points made so far – most mobile AR usage today is brand-sponsored rather than consumer-purchased. This same B2B2C principle applies in other categories in this forecast, such as mobile AR media & games development.

Beyond B2B2C, there’s also B2B spending in mobile AR. This mostly involves software that helps industrial and corporate enterprises boost their effectiveness or productivity. For example, AR can help IT services companies empower their field reps to operate with greater speed and effectiveness through line-of-sight guidance and remote support. This enterprise productivity use case holds the most promise in headworn AR but today remains more prevalent in mobile AR, due to smartphone ubiquity.

So how do all these principles translate to revenue? That’s what we’ll quantify and qualify 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’ 18 years in research and intelligence in tech sectors. This includes the past 8 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. For more information on what’s included and not included in the forecast (a key consideration when evaluating the findings) see the next slide.

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

Spatial computing continues to evolve and take shape as an industry. Like other tech sectors, it has spawned several sub-segments that comprise an ecosystem. These each represent standalone topics in ARtillery Intelligence’s ongoing analysis, including monthly reports like this.

Prominent sectors so far include industrial AR, consumer VR, and other immersive entertainment. But existing alongside all of them is AR marketing. Among other things, this includes sponsored AR lenses that let consumers immersively engage with brands or virtually try-on their products.

Supporting AR 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 meanwhile offer the additional ability to amplify lenses throughout their social graphs. That paid amplification is projected to drive $4.8 billion in brand spending this year and $10.7 billion by 2027.

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.

These performance metrics were analyzed in past volumes of this report series, and we now continue the narrative with another round of case studies. 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 continuing education around AR marketing best practices, year-round. 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 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’ 18 years in tech-sector research and intelligence. This includes the past 8 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 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

Spatial computing – including AR, VR, and other immersive tech – continues to alter the ways that we work, play, and live. But there have been ups and downs, characteristic of hype cycles. The pendulum has swung toward over-investment, then toward market correction – leaving us now in a middle ground of reset expectations and moderate growth.

Meanwhile, recent history has brought a few notable milestones in XR subcategories ranging from mixed reality (MR) to low-immersion smart glasses, to the sector’s new high-water mark: Apple Vision Pro.

Taking those factors one at a time, MR has been elevated to a new market standard in VR, thanks to Meta Quest 3. HD color passthrough cameras not only broaden VR use cases and user friendliness but they advance AR. In other words, AR can live on, and be incubated within, the more mature and penetrated VR hardware market. This exposes AR by seeding its demand with a broader set of new users. And that’s what Meta wants. Quest 3, among other things, is Meta’s bridge to its longer-term AR ambitions.

The same can be said for Ray-Ban Meta Smart glasses (RBMS), which accommodate style and wearability while the visual UX is toned down. Meta will approach the holy grail of all-day AR glasses from both directions – smart glasses and mixed-reality headsets – which will someday meet in the middle.

Meanwhile, RBMS sets the bar for smart glasses with an AI-powered UX whose appeal lies not in graphical dimensionality but relevant information delivery. We’re talking personal alerts, social signals, shopping & commerce, and AI-fueled object recognition.

That brings us to the big topic that’s defined the tech sector over the past year: AI. The rise of generative and conversational AI from the likes of OpenAI has characterized the technological zeitgeist. But the big question is how it intersects with XR. In short, XR can be the face of AI, while AI is the brains of XR.

For example, as we explored in a recent report, generative AI can aid in XR experience creation, thus automating and streamlining developer workflows. It can also transform user interfaces for XR devices ranging from smart glasses to mixed reality headsets. This is already seen in the AI object-recognition and personal-assistant functions of RBMS, as noted.

At the other end of the experiential spectrum, we have Apple Vision Pro. Shooting for the extent of what’s possible in spatial computing today, it could seed demand for XR by making it sexy and coveted from a mainstream perspective. This is a status that’s been elusive for AR and VR over the past decade.

This influence could take time, given Vision Pro’s price tag and long evolutionary path. But in the meantime, Apple could lift all boats through its signature “halo effect.” This unlocks opportunities for smaller players to meet XR’s elevated demands at lower price points.

Beyond user-facing products, a spatial tech stack lies beneath. This involves a cast of supporting parts. We’re talking processing muscle (Qualcomm), experience creation (Adobe), and developer platforms (Niantic). These are the engines of XR growth.

So how is all of this coming together? Where are we in spatial computing’s lifecycle? And where are there gaps in the value chain that signal opportunity for AR and VR players? We’ll tackle these questions and others in this report through numbers and narratives.

Price: $999

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO. You can also purchase it a la carte.

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Companion Video

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 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’ 18 years in tech-sector research and intelligence. This includes the past 8 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 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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