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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.

Price: $1,499

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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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Executive Summary

One of AR’s fundamental properties is to fuse the digital and physical. As such, the real world is a key part of that formula… and real-world relevance is often defined by location. As the saying goes for real estate value, it’s all about three factors: location, location, location.

With that backdrop, one of AR’s battlegrounds will be in augmenting the world in location-relevant ways. That could be wayfinding with Google Live View, or visual search with Google Lens. Point your phone (or future glasses) at places and objects to contextualize them.

As these examples suggest, Google has a key stake in this “Internet of Places,” or what we’ve been calling the “metavearth.” It’s driven to future proof its core business, where the camera will be one of many search inputs. And it has valuable geo-local data from products like Maps and Street View to support its efforts.

But Google isn’t alone. Apple signals interest in location-relevant AR through its geo-anchors. These evoke AR’s location-based underpinnings by letting users plant and discover spatially-anchored digital content. Facebook is similarly building “Live Maps” as a component of its multi-sided AR master plan.

Then there’s Snap, the king of consumer AR. Erstwhile propelled by selfie-lenses, its larger AR ambitions will flip the focus to the rear-facing camera to augment the broader canvas of the physical world. Meanwhile, Niantic continues to rule geo-local AR gaming through Pokémon Go as well as its Lightship platform that will geo-enable third-party AR developers.

Beyond tech giants and other usual suspects, there are compelling startups positioning themselves at the intersection of AR and geolocation. These include Foursquare, Gowalla, ARWay, Resonai, Darabase, YouAR, and a growing list of others.

If any of this sounds familiar, it’s aligned with a guiding principle for AR’s future: The AR cloud. Otherwise known as AR’s metaverse, this is a conceptual framework in which invisible data layers coat the inhabitable earth to enable AR devices to trigger geo-specific experiences.

But true to the many tech-giant efforts just outlined, it won’t just be one cloud or metaverse, as these singular-tense terms suggest. Multiple geo-located AR networks and experiences will compete. Like the web today, the AR cloud will ideally have standards and protocols for interoperability, while allowing for proprietary content and networks to coexist.

But rather than websites, this proprietary content will be in “layers.” The thought is that AR devices can reveal certain layers based on user intent and authentication. You’ll activate the social layer for social-graph activity, and the commerce layer to find products.

There are of course several moving parts. 5G will help achieve millimeter-level precision for geolocated AR. LiDAR will meanwhile unlock advanced optics that can enable the high-scale crowdsourced 3D data needed to spatially map the inhabitable earth. It will be a group effort.

But how will this all come together? What are the missing pieces? And who’s doing what so far? We’ll tackle these questions throughout this report by profiling the biggest players that are planting their flags for the future of geo-local AR. The goal, as always, 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

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 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 emboldens 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. Last year, we began to produce separate forecasts for AR and VR. Though they share technological underpinnings, their nuanced market dynamics deserve standalone examination.

We continue to double down on that segmentation by focusing this report on headworn AR specifically. Given its unique dynamics – in both technology and user adoption patterns – it compels its own focused analysis. This allows us to go deeper on key revenue sources like consumer, corporate & industrial, and AR-enablement software. We did the same earlier this year for mobile AR.

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 AR 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 mobile AR spending in outer years of this financial outlook.

The burning questions: How is headworn AR pacing? Which subsectors are most opportune? And how is AR primed for the post-Covid era? We answer these questions through numbers & narrative in this slide-based report. The goal, as always, is to empower you with a knowledge position.

Price: $1,499

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

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What’s Covered?

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 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 figures) see slide 5.

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

There’s growing sentiment in the mobile AR world that apps aren’t the optimal vessel. Yet the technology lives on a device where apps rule. 90 percent of mobile users’ time is spent in apps versus the browser. Can AR break that cycle? And if so, could web AR be the answer?

What is web AR? In short, it delivers AR experiences through the mobile browser. Advantages include dynamism for AR’s serendipity and short sessions, versus the friction of app stores and downloads. There, “activation energy” dampens AR adoption which is already challenged to begin with.

For example, will consumers spend 90 seconds downloading an app for an experience that lasts 30 seconds? Consider this in light of dynamic AR activations within a store aisle or real-world social interaction. These scenarios happen fast and need an AR delivery system that can be the same.

In these moments of dynamic activation, AR formats that can be launched quickly – and with broad compatibility – will find the most commercial success. These factors will also grow in importance as brands and retailers increasingly plant AR activation markers everywhere from websites to product packaging to public-space signage.

Web AR also inherits the qualities of the web, meaning interoperability with common web standards and functions. For example, web AR campaigns can utilize tools like Google Analytics for nuanced campaign metrics. The same level of performance tracking isn’t possible on other popular AR channels and walled gardens such as social apps.

Beyond functional advantages, one of web AR’s benefits is its potential reach. Because of mobile platform fragmentation, developers and marketers building app-based ads and experiences must choose a lane… or jump through hoops to develop creations that can be distributed across platforms.

The web is conversely operable across all smartphones. This allows for the widest range of devices that a given AR ad campaign can reach. This is an important consideration, given the relatively small size of the consumer AR base. Fragmenting that already finite universe diminishes addressable market.

Synthesizing all these factors, ARtillery Intelligence estimates that web AR’s addressable market is 3.06 billion global smartphones today – the greatest reach of any AR platform. Yet it’s among the least-used consumer AR formats, due mostly to its nascent status. Altogether, this means that web AR has more headroom and growth potential than any other AR delivery channel.

But how will web AR reach that potential? What are best practices for web AR experiences and marketing campaigns? And who’s doing it right so far? We’ll tackle these questions and others throughout this report, including numbers, narratives, and case studies. The goal, as always, 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

ARtillery Intelligence has no financial stake in the companies mentioned in its reports, unless specified in footnotes and endnotes. The production of this report likewise wasn’t commissioned. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure 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 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 emboldens 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. Last year, 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.

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 AR 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 mobile AR spend in outer years of this financial outlook.

The burning questions: How is mobile AR pacing? Which subsectors are most opportune? And how is AR primed for the post-Covid era? We answer these questions through numbers & narrative in this slide-based report. The goal, as always, is to empower you with a knowledge position.

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What’s Covered?

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 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 figures) see slide 5.

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

In AR’s early stages, a few areas stand out for their monetization potential and business case. We’ve examined such areas in past reports, including AR’s role in enterprise productivity, and its use in helping consumer brands add dimension to their product marketing.

But another branch of AR has potentially greater experiential impact for consumers, and revenue impact for brands: immersive shopping. Related to – but separate from – AR advertising, this is when AR is used as a tool to visualize and contextualize products for more informed consumer purchases.

This is a subset of AR that we call camera commerce. It comes in a few flavors, including visualizing products on “spaces and faces,” to see if they fit. It also includes visual search, which involves pointing one’s smartphone camera at a given product to get informational, identifying or transactional overlays.

Among these formats, product visualization is out of the gate first and has the most traction. Visual search is meanwhile less mature due to more complex technological underpinnings like computer vision. But it has greater monetization potential, given the high-intent use case of actively scanning items.

In each case, AR brings additional context and confidence to product purchases. And this value has been elevated during a pandemic when eCommerce itself has inflected. AR has brought back some of the product dimension and tactile detail that’s been taken away from consumers during retail lockdowns.

Beyond the pandemic, AR brings sustained value as a shopping tool as it’s proven to boost conversions in several eCommerce scenarios. For example, Shopify reports that products that offer 3D and AR visualization achieved 94 percent greater conversions on average than non-AR equivalents.

In addition to boosting conversion rates, the informed purchases that AR engenders can reduce return rates. For example, SeekXR reports that AR-guided purchases have 25 percent fewer returns than non-AR benchmarks. This is a welcome benefit for online merchants who suffer from margin-depleting product returns.

Beyond online shopping, camera commerce could find a home in brick & mortar retail. Specifically, it could develop as a utility for in-aisle interactions such as evoking product details. This could also support “touchless” retail shopping if epidemiological health measures sustain into the post-Covid era.

Synthesizing these factors – along with AR’s broader growth and cultural acclimation – ARtillery Intelligence estimates that AR will influence $36 billion in consumer spending by 2024. This means that AR will play a role in some part of the consideration funnel for these transactions.

But how will this all come together? What cultural and technological barriers loom? And who’s doing what? We’ll tackle these questions throughout this report, including numbers, narratives and case studies for 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

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure 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 important, what are non-users’ reasons for disinterest? And how can VR software and hardware developers optimize product strategies accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 46,000 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 similar report on AR). Wave V of the research now emboldens our perspective and brings new insights and trend data to light. All five 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 access to a VR headset, up from 19 percent in 2020. More importantly, VR users indicate high levels of satisfaction with the experience: 70 percent are either satisfied or extremely satisfied.

As for price sensitivity, demand inflects in the $200-$400 price range. This is notably the price range where Oculus Quest 2 resides. This validates evidence we’ve seen elsewhere – and market-sizing estimates we’ve made – for Quest 2’s growth. It continues to hold a quality edge, aggressive price competition, and accelerating VR market share.

Furthermore, standalone VR – embodied by Quest 2 and other emerging headsets – represents a key inflection point. Though still early, standalone VR addresses many consumer objections to PC-based VR including cost, confinement, and setup friction.

However, it’s not all good news: Non-VR users report relatively low interest in VR ownership – 20 percent, down from 29 percent in Wave IV – and explicit ambivalence towards the technology. This downward trend is concerning for VR, as public interest in the technology 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 challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges for the industry to push that first taste.

But if anything is going to bring that accessibility and interest to mainstream markets, it’s the lowered pricing and compelling play of standalone VR headsets like Quest 2. The device continues to turn heads and break pricing barriers, given Oculus’ loss-leader pricing strategy to subsidize hardware in order to build a network effect.

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 46,000 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’ 15 years in tech sector research and intelligence. This includes the past 5 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 and methodology can be read here.

Disclosure & Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

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