Extended Reality (XR) Market size is estimated to cross USD 1423.73 Billion by the end of 2035, growing at a CAGR of 33.60% during the forecast period, i.e., 2023-2035. In the year 2022, the industry size of extended reality was over USD 44.03 Billion.The growth of the market can be attributed to the growing demand for advanced technologies such as virtual reality (VR), augmented reality (AR), and mixed reality (MR). The number of VR users around the world has reached more than 170 million. Currently, 79% of Americans are familiar with virtual reality technology. As of 2019, 15 million AR and VR devices had been sold. Globally, the number of VR/AR devices shipped in 2023 is expected to increase to 67 million. As technology advances, more companies are investing in extended reality technology in order to keep up with the competition and capitalize on the growing demand for immersive experiences. This demand is being driven by the need for more engaging content, such as video games, educational materials, and other entertainment.
In addition to these, factors that are believed to fuel the extended reality market growth of extended reality include the growing demand for 3D visualization in various applications, the development of sophisticated hardware and software solutions, and the emergence of artificial intelligence and IoT devices. Currently, there are 15 billion Internet of Things devices, which is expected to grow by over threefold by 2030 to 26 billion. A total of USD 745 billion was spent on IoT in 2020. A trillion dollars are predicted to be spent on IoT globally by 2022. With the help of machine learning algorithms, AI and IoT devices are capable of collecting and analyzing data in real-time, enabling them to make decisions based on the data collected. This can help create more immersive experiences in extended reality applications, such as virtual reality and augmented reality.
Growth Drivers
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Base Year |
2022 |
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Forecast Year |
2023-2035 |
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CAGR |
~33.60% |
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Base Year Market Size (2022) |
~ USD 44.03 Billion |
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Forecast Year Market Size (2035) |
~ USD 1423.73 Billion |
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Regional Scope |
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Technology {Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR)}
The global extended reality market is segmented and analyzed for demand and supply by technology into virtual reality (VR), augmented reality (AR), mixed reality (MR). Out of these, the virtual reality (VR) segment is estimated to gain the largest market share of about ~39% in the year 2035. The growth of the segment can be attributed to the increasing use of virtual reality in various industries such as entertainment, education, healthcare, and retail, owing to its immersive experience. Moreover, a virtual reality system has become as common in homes as a laptop or a television, and the number of VR users is continuously growing each year as the technology becomes more widely available. Approximately 170 million people around the world use VR in some way. 68 percent of VR users intend to increase their VR usage in the coming year. According to reports, there are predicted to be more than 10 million VR units sold in the year 2021. Furthermore, the increasing availability of VR hardware and software, and the declining cost of VR headsets are also expected to drive the growth of the VR segment.
Component (Hardware, Software, Services)
The global extended reality market is segmented and analyzed for demand and supply by component into hardware, software, and services. Out of these, the hardware segment is estimated to gain a significant market share of about ~47% in the year 2035. The growth of the segment can be attributed to the increasing demand for the development and adoption of head-mounted displays, smartphones, motion sensors, and other hardware components in extended reality applications. The hardware segment is also projected to witness the highest growth rate owing to the increasing investments in the development of extended reality technology. Companies are investing heavily in the research and development of extended reality hardware, such as headsets and haptic gloves, which are necessary for a fully immersive experience.
Our in-depth analysis of the global market includes the following segments:
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By Component |
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By Technology |
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By Solution |
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By Device Type |
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By End User |
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North American Market Forecast
The extended reality market in North America is projected to be the largest with a share of about ~35% by the end of 2035. The growth of the market can be attributed majorly to the increasing demand for immersive technologies in the aerospace and defense sectors. Having a strong manufacturing base, a highly skilled workforce, and access to research and development resources, the United States is home to the world's largest aerospace industry. The A&D industry is increasingly using extended reality technologies such as VR, AR to improve the efficiency and accuracy of their operations. These technologies help in simulating and training aircraft pilots, personnel maintenance and repair, and logistics. In addition, it was announced in 2021 that Microsoft had been awarded a contract from the U.S. Army for 120,000 Microsoft HoloLens augmented reality headsets, worth up to USD 20 billion over a ten-year period. Moreover, high adoption rate of AR and VR technologies in various end use industries, along with the availability of high-speed internet connectivity, and the presence of leading technology companies in the region is projected to drive regional market growth.
APAC Market Statistics
The Asia Pacific extended reality market is estimated to be the second largest, registering a share of about ~26% by the end of 2035. The growth of the market can be attributed majorly to the increasing demand for immersive experiences, growth in the gaming industry, and increasing investments in the development of extended reality solutions. These factors, coupled with the growing popularity of extended reality-based devices such as smart glasses, are driving the growth of the market. Consumer-facing smart glasses are becoming increasingly popular in China. In October 2022, Hangzhou-based Rokid released a new intelligent terminal for AR glasses, Rokid Station, which is aimed at enriching the content ecology and bringing users more applications. Additionally, Xiaomi's AR glasses hold the fourth largest market share in China. Additionally, the increasing disposable income of citizens and the rising demand for virtual reality media are also factors that are driving the growth of the market in the Asia Pacific region.
Europe Market Forecast
Further, the extended reality market in the Europe, amongst the market in all the other regions, is projected to hold a majority of the share by the end of 2035. The growth of the market can be attributed majorly to the rising demand for Head-mounted displays (HMDs) from the ever evolving gaming and entertainment sector in the region. With the emergence of 5G technology and increasing investments in the entertainment sector, HMDs are becoming increasingly popular among consumers. This is expected to boost the demand for extended reality products, such as HMDs, in Europe. Governments of European countries are heavily investing in the development of extended reality technologies, which is resulting in increased adoption of these technologies in various industries. For instance, as part of the Virtual and Augmented Reality Industrial Coalition's roadmap for VR/AR in Europe, over 40 EU organizations are operating and investing in these technologies. The roadmap has been endorsed by the European Commission.
Author Credits: Abhishek Verma, Hetal Singh
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