April 20, 2024

Extended Reality is Estimated to Witness High Growth Owing to Growing Demand for Immersive Experiences


Extended reality commonly known as XR encompasses augmented reality (AR), virtual reality (VR), and mixed reality (MR) technologies. XR allows the visualization of digital information in real-world environments or imagined scenarios to enhance or replace existing environments. It finds applications in various industries including gaming, healthcare, military & defense, retail, education, travel & tourism, and events. AR brings digital objects into the real world by overlaying them onto the real environment, while VR immerses users in an alternate virtual world. MR fuses reality and virtuality together resulting in a blend of real and virtual worlds. The growing demand for immersive experiences owing to technological advancements in AR, VR, and MR technologies and devices have been driving the growth of the extended reality market.

The Global Extended Reality Market is estimated to be valued at US$ 70.05 Bn in 2024 and is expected to exhibit a CAGR of 23.% over the forecast period 2024 to 2031.

Key Takeaways
Key players operating in the extended reality market are Meta Inc., HTC Corporation, Unity Technologies, Microsoft Corporation, Samsung Electronics Co., Ltd., Magic Leap, Sony Corporation, Vuzix Corporation, Apple Inc, Niantic Inc., Northern Digital Inc., Snap Inc., SoftServe, and Accenture.

Growing investments from technology giants in XR and rising demand for consumer applications are expected to offer lucrative opportunities for market players. Facebook has invested over $2 billion in its AR/VR initiatives since 2014 and Microsoft Corporation has been the leading adopter of mixed reality technologies across industries.

Increasing digitization across industries is fueling demand for immersive technologies globally. North America dominated the market in 2024 owing to high tech adoption; however, Asia Pacific is expected to witness the highest growth over the forecast period with growing consumer base in countries like China and India.

Market Drivers
Growing demand for immersive experiences owing to technological advancements in AR, VR, and MR technologies and devices have been driving the growth of the extended reality market. Improved processing capabilities and miniaturization have led to the development of integrated smartphones, AR/VR headsets and smart glasses which provide immersive experience to users. This has increased XR adoption in various industries especially gaming and entertainment. Increased investments in 5G networks would further boost XR capabilities and drive the demand.

PEST Analysis
Political: The Extended Reality Market is subject to various privacy and data regulations across different countries and regions. Regulations around data privacy and usage are continually evolving.

Economic: Global economic conditions influence consumer spending and investment in new technologies. Extended reality adoption depends on willingness of enterprises and consumers to invest in new immersive technology solutions.

Social: Younger demographic cohorts are more open to adopting emerging technologies. Widespread use of smartphones and familiarity with virtual experiences is improving user readiness for extended reality applications.

Technological: Advancements in different technologies such as displays, processors, sensors, connectivity and software platforms are improving the user experience for extended reality. Hybrid technologies are integrating augmented and virtual reality capabilities.

Geographical concentration
North America accounted for the largest share of the Extended Reality Market in terms of value in 2024 due to early technology adoption, presence of major technology companies and availability of capital investments for development of immersive solutions.

Fastest growing region
The Asia Pacific region is expected to grow at the fastest pace during the forecast period owing to rapid digital transformation of industries, investments in 5G infrastructure and increasing disposable incomes in developing countries leading to higher spending on new technologies. Countries like China, Japan and South Korea are driving the extended reality market growth in Asia Pacific.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it