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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.

In covering spatial computing for seven 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.

Beyond 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. More recently, we began to produce separate forecasts for 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 specifically. 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 on key revenue sources like consumer, corporate & industrial, advertising and commerce. We’ll do the same later this year for head-worn AR and VR.

So what did we find out? Our outlook continues to be best characterized as cautiously optimistic, especially when compared to large generalist research firms that turn attention to AR occasionally to publish eyepopping revenue estimates in the hundreds of billions of dollars. By comparison, we’re comfortably and confidently in the U.S.$ tens-of-billions range for aggregate mobile AR spending in outer years of this financial outlook.

The burning questions: How is mobile AR pacing? Which subsectors are most opportune? And what are the business models developing today? We answer these questions through numbers & narrative in this slide-based report. The goal, as always, is to empower you with a knowledge edge.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 17 years in research and intelligence in tech sectors. This includes the past 7 years covering AR & VR as a primary focus.

This report focuses on AR 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

Shoppability is the new black. There’s a trend towards all things being shoppable. We’re talking buy buttons on everything from YouTube videos to Instagram Stories. This isn’t a new concept but is one of many trends that’s been Covid-accelerated as it piggybacks on broader eCommerce inflections.

To put a number on this phenomenon, consumer purchases influenced by social media – otherwise known as social commerce – are projected to grow from $492 billion globally to $1.2 trillion by 2025 according to Accenture. This growth will be fueled by the rise of online social influence, and the “shoppability” trend noted above.

Elsewhere – and for similar reasons – we see a separate trend: camera commerce. Examined recently in an ARtillery Intelligence report, this involves AR-fueled shopping. This broad category can involve 3D and spatial product visualization to virtually try on everything from cosmetics to couches.

Camera commerce also includes visual search. This flavor of AR – seen in Snap Scan and Google Lens – lets consumers point their phones at objects to contextualize them. And the killer app is interactive shopping. Camera-forward consumers can identify, and buy, items they encounter in daily travels. In fashion contexts, Snap calls it “outfit inspiration.”

Panning back, these two macro trends – shoppability and camera commerce – are on a collision course. Point your phone at a jacket a friend is wearing using Snap Scan, then buy it right on the spot. This process compresses the traditional purchase funnel through a visually-informed consumer shopping flow.

This collision of AR and shopping is also future proofed. In other words, it will only grow as it’s well aligned with the habits and proclivities of the “camera-native” generation Z. This is an important trend as gen Z is increasingly buying-empowered as it phases in to a dominant and influential position within the adult consumer population.

All of the above is underway, but there’s a ways to go in cultural acclimation and capability. The former is happening gradually in the gen Z cultural takeover, among other factors. But it could still use a jolt… which is happening as underlying capabilities evolve and as tech giants plant their stakes in AR shopping to future proof their businesses.

So far, those tech giants include the players noted already – Google and Snap. But it also includes a broader set of companies that see opportunity in this fusion of AR and shopping. We’re talking Pinterest, Shopify, Houzz, TikTok and a growing list of others with a vested interest in eCommerce-based revenue.

So who is doing what? Where are meaningful products and business models developing today? And where could this collision of AR and shopping lead us next? We’ll examine these questions throughout this report, including case studies that spotlight leading innovators at the intersection of shoppability and camera commerce.

The goal, as always, is to empower you with a knowledge edge.

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Methodology

This report highlights ARtillery Intelligence’s viewpoints, gathered from its daily in-depth coverage of spatial computing. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence 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 VR? 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 can VR software and hardware developers optimize product strategies accordingly?

These are questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 98,000 U.S. adults through Thrive’s established consumer survey engine. The results are in, and we’ve analyzed the takeaways in a narrative report.

This follows similar reports we’ve completed over the past five years (and last month’s corresponding AR report ). Wave VI of the research now emboldens our perspective and brings new insights and trends to light. All six 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, 23 percent of households own or have used a VR headset, the same amount reported in Wave V. Though this is flat growth, the good news is that VR continues to show high satisfaction levels and usage frequency.

As for price sensitivity, demand inflects when prices fall into the $200-$400 range and lower. This is notably the Meta Quest 2’s price range. In that light, this finding validates other evidence – and our market-sizing estimates – for Quest 2’s growth. It continues to hold a quality edge, aggressive price competition, and an accelerating VR market share.

Furthermore, standalone VR – embodied by Quest 2 – outperforms other categories. It specifically addresses many consumer objections to PC-based VR including cost, confinement, and setup friction. One exception is game console-based VR – namely PSVR – which has established a user-friendly persona.

Meanwhile, non-VR users report relatively low interest – 18 percent, down from 20 percent in Wave V. Worse is their explicit ambivalence towards the technology (“just not interested”). This downward trend is concerning, as public interest in VR continues to wane from its peak during the industry’s circa-2017 hype cycle.

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 don’t want to try it, which presents a sizable marketing challenge for VR proponents to push that first taste.

But if anything is going to bring that accessibility and interest to mainstream markets, it’s the aggressive pricing and compelling play of Meta Quest 2, as noted. These factors continue to attract new users, which then attract developers. As game & app libraries build in this way, a virtuous cycle – or flywheel effect – propels the VR market.

These points join several other strategic implications that flow from the latest consumer VR sentiments. We’ll examine those takeaways in the coming pages, including the latest wave of findings and our analysis for what it means. The goal, as always, is to empower you with a knowledge edge.

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Methodology

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 98,400 U.S. Adults. ARtillery Intelligence wrote this report, containing its insights and viewpoints on the survey results.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 17 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports 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

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 products and 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 102,000 U.S. adults through Thrive’s established consumer survey engine. As the fifth wave of this mobile AR research, 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. Now a deeper view into real consumer usage and attitudes validates those narratives while providing new dimension on mobile AR strategies and opportunities.

So what did we find out? At a high level, mobile AR usage has grown to 30 percent of U.S. adults. Many of these users experience AR through dedicated AR 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 54 percent reporting that they use it at least weekly. The top app category is gaming, which we attribute to Pokémon Go’s sustained traction. But other categories such as social AR and visual search continue to make headway. Mobile AR users also indicate high levels of satisfaction.

But beyond these and a few other positive signals, there are negative signs and areas for improvement. For example, non-mobile AR 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 get it. But there’s little drive for non-users to get that first taste. This boils down to 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 corresponding VR consumer research that we’ll produce in a report like this next month. This makes it a common challenge for immersive tech, though AR is relatively advantaged by mobile 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 real endgame: headworn. As always, the goal is to empower ARtillery Pro subscribers with a greater knowledge position.

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Methodology

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 102,000 U.S. Adults. ARtillery Intelligence wrote this report, containing its insights and viewpoints on the survey results.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 17 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports 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

Though we spend ample time examining consumer-based AR endpoints, greater near-term impact is seen today in the enterprise.

This takes many forms including data visualization in corporate settings, or software to create customer-facing AR experiences for brands. But the greatest area of enterprise AR impact today is realized in industrial settings.

These use cases include AR visualization to support assembly and maintenance in manufacturing contexts. The idea is that AR’s line-of-sight orientation can guide front-line workers. Compared to the “mental mapping” they must do with 2D instructions, line-of-sight support makes them more effective.

This effectiveness results from AR-guided speed, accuracy, and safety. These micro efficiencies add up to worthwhile bottom-line impact when implemented at scale in industrial operations. Macro benefits meanwhile include lessening job strain and the “skills gap,” which can lead to preserving institutional knowledge.

For example, AR leader PTC reports up to 40 percent improvements in new employee productivity, 30 percent greater first-time fix rates, 50 percent reductions in training costs, and 25 percent reductions in materials scrap.

But it’s not all good news. Though all these advantages are valid, it’s challenging to get to the point of realizing them. Practical and logistical barriers loom, including organizational inertia, politics, change management and fear of new technology among front-line workers.

The biggest symptom of these stumbling blocks is the dreaded “pilot purgatory.” As its name suggests, this is when AR is adopted at the pilot stage, but never progresses to full deployment. It’s one of the biggest barriers and pain points in enterprise AR today.

ARtillery Intelligence has identified sources and solution areas for pilot purgatory as the “3 Ps.” Comprising people, product, and process, they’re the top areas where effective AR implementation strategies should focus.

With that backdrop, we continue the narrative in this report on enterprise AR, including new ARtillery Intelligence market sizing data. Moreover, we devote the bulk of this report to “show rather than tell.” We’ll do this 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 AR 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 variety of business verticals.

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

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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’s viewpoints, gathered from its daily in-depth coverage of spatial computing. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence 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

Augmented reality 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 Intelligence Briefings like this.

Prominent sectors so far include industrial AR, consumer VR, and AR shopping (a.k.a., camera commerce). But existing alongside all of them – and overlapping to some degree – is AR marketing. Among other things, this includes sponsored AR lenses that let consumers visualize products in their space.

In fact, immersive ad placement is a primary AR marketing subsegment, on pace to reach $2.9 billion this year according to ARtillery Intelligence’s mobile AR forecast. This puts it on pace for an estimated $6.7 billion by 2025. These figures measure spending on amplified AR lens placement in paid distribution channels such as Instagram and Snapchat.

As we’ve examined in past reports, the factors propelling this revenue growth include brand 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.

Beyond that high-level appeal among creative professionals, there’s a real business case. AR marketing campaigns continue to show strong performance metrics. This was the case in “normal” times and has accelerated during the Covid era when retail lockdowns compelled AR’s ability to visualize products remotely.

Proof points can be seen in the numbers, such as campaign performance metrics analyzed in past case studies that we’ve published. We’re now doubling down on those narratives with another round of case studies.

The goal is to explore not only the what and why of AR marketing – which is a well-worn topic by now – but the how. This takes shape in AR campaign breakdowns. What’s working and not working in these early stages while the AR advertising playbook is still being written?

Another ongoing theme carried forward in this report is how AR marketing campaigns 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-driven campaigns to lower-funnel conversion-driven campaigns.

The ten case studies in this report will accordingly span 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 continue to be a moving target.

As a bonus, ARtillery Intelligence has created a repository of AR ad campaigns. Known as Campaign Tracker, it lives on ARtillery Pro, available for all subscribers (click here). It includes AR ad campaigns at-a-glance and in-depth. It’s meant to supplement this report series with ongoing education around AR ad best practices. As always, the goal is to empower you with a knowledge edge.

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’s viewpoints, gathered from its daily in-depth coverage of spatial computing. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence 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

What’s the state of spatial computing? As we enter a new year, we embark on our annual exercise of defining the sector, its players, events, and trajectory. As for findings and highlights, the collective grouping of subsectors known as XR continues to push forward and invest tens of billions per year to realize self-centric versions of a spatial future.

One byproduct of this process is mixed reality’s elevated status as a new standard in VR, thanks to Meta Quest 3 and 3s. Meta isn’t first to market with mixed reality, but it’s combined the modality with the element of affordability. Along with this trend, HD color passthrough cameras broaden VR use cases and utility. They also advance AR, which can piggyback on the more mature and penetrated VR market.

Meanwhile, Ray-Ban Meta Smartglasses (RBMS) set the bar for headworn devices that are supported by AI. Among other advantages, this limits reliance on graphical dimensionality as a selling point. They rather rely on relevant information delivery such as personal
alerts, social signals, shopping & commerce, and real-world object recognition. This utility is met with the style and wearability that’s possible when you sidestep AR optical and display systems.

Then there’s Meta Orion. Though only a working prototype, it has cracked the code on achieving both a visually-robust UX and style/wearability. Now, Meta must spend years cracking another code: marketing an Orion-like product for less than $10,000 – the device’s current per-unit cost. But it has meanwhile demonstrated what’s technically possible in AR today.

Though many believe all the above approaches will someday meet in the middle for an ultimate XR device, we believe they’ll continue to develop along parallel tracks. They’ll be purpose built for varied use cases that map to their strengths – for the same reason you use a laptop and a smartphone, versus trying to do everything on a tablet. This multi-track approach also maximizes Meta’s market opportunity amidst a challenged XR adoption environment.

But it’s not just about Meta. Like Orion, Apple Vision Pro achieves the extent of what’s possible in spatial computing today – albeit a vastly different approach to augmentation. But unlike Orion, Vision Pro is available today, rather than sitting behind locked doors for internal use only. And though Vision Pro’s sales have disappointed, Apple admits that it’s “not a mass market product.” Moreover, Apple is playing a long game with Vision Pro as the first step towards its massive and inherently-advantaged spatial ambitions.

Meanwhile, mobile AR leader Snap continues to make strong moves in headworn AR. Its latest Spectacles raise the bar for commercially-available (though only for developers at this stage) AR glasses. And in a similar device class for optical seethrough AR (definitions are detailed in this report), we continue to see compelling hardware from Xreal. Though it doesn’t achieve dimensional AR like Spectacles and Orion, Xreal nails a simple and relatable use case: virtual private displays for entertainment & gaming.

Google and Samsung have also (re)entered the XR race, and have done so together. Android XR will be first available on Samsung headsets. This could be formidable, given Google’s AI capabilities in Gemini, which are infused in Android XR. Like Apple, Google’s platform position also offers advantages, such as bringing legions of existing Android apps into XR.

Speaking of platforms, it’s not just about devices. With all the above, a spatial stack lies beneath. This involves a cast of supporting roles like processing (Qualcomm), creation (Adobe), and dev tools (Niantic). And while headworn XR continues to evolve, Mobile AR is here today on about 3 billion devices.

Lastly, hanging over all the above are two little letters: AI. On one level, generative AI aids XR experience creation, thus streamlining developer workflows. On another level, it redefines user interfaces and inputs for XR devices ranging from smart glasses to mixed reality headsets. This is already happening.

So how is all of this coming together? What are these diverging and developing XR device categories? And who’s best positioned in the spatial spectrum? We’ll tackle these questions and others in this report series through numbers and narratives.

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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’ 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 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

AR and VR – collectively known as spatial computing – continue to hold immense potential. Though they don’t represent the imminent tech revolution trumpeted in their circa-2017 hype cycle, they continue to show gradual progress. After a shakeout followed that hype cycle, AR and VR are now steadily growing at measured and realistic paces.

But the spatial spectrum deserves more nuanced analysis as there are varying growth curves across AR and VR subsectors. Those seeing the most commercial traction include AR marketing & commerce, and consumer VR. Meta (formerly Facebook) continues to advance the latter with massive investments and loss-leader pricing for its flagship Quest 2.

Speaking of Meta, one thing that characterizes spatial computing in 2021 – for better or worse – is metaverse mania. The term resurfaced in 2021 after several mini-hype cycles over the past 30 years. This time, the volume was amplified as the metaverse aligns with growth in AR and VR noted above… not to mention Meta’s highly-exposed investments. It spends $10 billion+ annually to accelerate its vision.

But as this metaverse hype cycle accelerates, there are mixed feelings among AR and VR proponents. On one hand, it brings unprecedented exposure to their work, which translates to investor and consumer excitement. On the other hand, connection to the “m-word” clouds AR and VR in mainstream perception as being futuristic jargon.

Stepping back, what is the metaverse? Mark Zuckerburg calls it an “embodied internet.” In other words, you’re in the internet instead of on the internet. This manifests in 3D virtual spaces that host time-synchronized interaction between place-shifted participants. Today’s metaverse-like fiefdoms include multiplayer games like Fortnite and Roblox.

But it’s not just about 3D gaming. The metaverse has two tracks. One is fully-immersive, mostly in a VR context. The other is a physical-world metaverse, where geo-anchored data triggers AR devices to evoke digital content where and when it’s relevant.

The second metaverse track involves a multi-dimensional data mesh that enables geo-relevant AR experiences. Think of this as an annotation layer for the world or an Internet of places. We refer to this as the metavearth, and a similar construct is known in spatial computing circles as the AR cloud.

Beyond Meta, others are investing in versions of the metaverse, including Google, Apple, Microsoft, and Niantic. They’re each driven to protect and future-proof core businesses. But a by-product of these self-interested investments will be an accelerated AR ecosystem. And acceleration is needed for a key step: the transition from mobile to head-worn AR.

So where are we in that journey? What did we learn in 2021? And what’s to come in 2022 across the subsegments of the spatial spectrum? We dive into these questions and others through numbers, narratives, and concrete predictions. The goal, as always, is to empower you with a knowledge edge.

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Methodology

This report highlights ARtillery Intelligence’s viewpoints, gathered from its daily in-depth coverage of spatial computing. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence 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 revenue estimates for the current and future spatial computing industry (methodology details here).

In covering spatial computing for six 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 reinforces our market insights.

Beyond knowledge position and market-sizing process, the focus of these forecasts likewise continues to evolve. Our first market forecast five years ago examined AR, VR and all their revenue subsegments. In recent years, we’ve begun to produce separate forecasts for AR and VR. Though they share technological underpinnings, their nuanced market dynamics deserve standalone examination.

This year, we continue that focused approach. After publishing forecasts in July on mobile AR*, and September on head-worn AR**, we now turn attention in this report to VR. This includes a revenue outlook for key categories such as hardware, software, consumer and enterprise spending. Other subdivisions include revenue categories like location-based entertainment.

So what did we find out? Our outlook continues to be best characterized as cautiously optimistic, especially when compared to several large research firms that turn attention to VR occasionally to publish eyepopping revenue estimates in the hundreds of billions of dollars. By comparison, we’re comfortably and confidently in the tens-of-billions range for aggregate VR spending in outer years of this financial outlook.

The question is how VR is materializing today? How are revenues trending? Which subsectors are most opportune? How will Meta’s ongoing investments accelerate the sector? And how will VR fare in the post-Covid era? We tackle these questions through numbers & narratives.

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Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 16 years in research and intelligence in tech sectors. This includes the past 6 years covering AR & VR as a main focus.

This report focuses on VR 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 findings) see the above 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

If there’s one term that’s reverberated throughout AR and VR circles more than any other in 2021, it’s metaverse. Though it represents legitimate principles, the word itself has become co-opted and conflated through overuse… as it often goes with buzzwords.

In broad terms, ‘metaverse’ defines digital worlds that host synchronous human interaction. Mark Zuckerberg – intent on making Facebook a metaverse company – describes it as an “embodied internet,” offering the connectivity, utility, and entertainment of the web, but fleshed out in 3D.

This is usually discussed in VR terms, such as digital domains that host synchronous interaction between place-shifted participants. Today, these include Altspace VR, Rec Room, and VRChat. We also have non-VR worlds like Fortnite, Roblox and (much earlier) Second Life. But these are collectively missing one key metaverse property: interoperability.

Meanwhile, the metaverse concept also applies to AR, as companies like Niantic build experiences and platforms for digital interaction with a physical world. These experiences are synchronous (experienced together at the same time) and persistent (anchored to locations). This metavearth was the topic of last month’s ARtillery Intelligence briefing.

Meanwhile, metaverse components and building blocks are being developed today. That will include a sort of metaverse stack, with access hardware, creation tools, 5G connectivity, sensory inputs, payment networks and identity protocols. These are each at early stages and need time to evolve and converge.

Even the metaverse’s use cases are unknown, though everyone likes to speculate. Novel use cases often aren’t devised until new platforms seep into the developer mindset. Apps like Uber – utilizing the mobile form factor and 4G – weren’t imagined when these enabling technologies were first devised or launched.

For that reason, we should be realistic about the metaverse’s timing. Its fully-actualized form – involving interoperable networks and devices – is likely years or even decades away. This qualifier rarely makes its way into metaverse musings that dominate tech headlines today.

In fact, if the VR and AR sectors should have learned anything in the circa-2017 hype cycle, it’s to not overpromise and underdeliver. That has set these industries back in terms of public sentiment and trust. The same dynamics will apply to the metaverse and its hype cycle.

Moreover, the metaverse requires a dose of caution in how it’s constructed. Given the immersive levels of user interaction and biometric tracking of an “embodied internet” nefarious intent could run rampant. And a new interactive paradigm provides opportunity to fix things that are sub-optimal on today’s 2D web.

But how will all of this come together? How will economies develop in the metaverse? What are the missing pieces? And what lessons does today’s web teach us? We’ll tackle these questions throughout this report in our own analysis and that of top minds we’ve assembled to weigh in. The goal, as always, is to empower you with a knowledge edge.

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Methodology

This report highlights ARtillery Intelligence’s viewpoints, gathered from its daily in-depth coverage of spatial computing. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence’s original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence 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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Editor’s note: While most ARtillery Intelligence reports are available for individual purchase, this report is available exclusively for ARtillery Pro subscribers. Sign up here.

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