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The global virtual reality market size was valued at USD 11.64 billion in 2021. The market is projected to grow from USD 16.67 billion in 2022 to USD 227.34 billion by 2029, exhibiting a CAGR of 45.2% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of 42.2% in 2020 as compared to 2019.
The study includes devices and software such as Quest 2, Google Cardboard, Microsoft HoloLens 2, PlayStation Headset and Move Motion Controller, Unity Virtual Reality Development Software, among others. Virtual reality provides simulated experience to the customers and offers vast applications to industries such as retail, healthcare, automotive, gaming, and entertainment, among others. The industries are adopting this immersive technology to conduct virtual training, assistance, marketing, engineering and maintenance, designing, and simulation activities with their employees and workers. Also, the advancement in the 5G technology and infrastructure is driving the virtual reality market growth. The key market players are extensively focused on offering advanced hardware and content to improve customer experience. For instance,
Vast VR Application Across Industries Amid COVID-19 Pandemic to Boost Market Growth
The production and manufacturing plants of components, devices, equipment, and other hardware products have been severely impacted owing to the coronavirus outbreak worldwide. The temporary shutdown of industries, limited number of in-house staff, sealed country borders, and more have significantly impacted the supply of components and the delivery of final products. Thus, initially, in 2020, owing to the limited stock of virtual reality products and services, the market witnessed a small dip in its year-on-year trend, and this has impacted the overall global market.
However, in many industrial applications, the technology emerged with a true potential to support the pandemic crisis. The demand for VR technology increased in industries apart from healthcare, such as education, gaming, entertainment, manufacturing, retail, military, and defense, among others. For instance, in the initial phase of 2020, the Kansas City University Center for Medical Education Innovation integrated immersive technology for medical student's training using fully immersive simulations. Thus, amid the pandemic, the VR demand in commercial industries has increased significantly, and its advancements have surged its potential for future applications.
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Growing Potential in Healthcare Industry to Fuel Market Expansion
As per the virtual reality statistics and industry experts’ analysis, the healthcare industry is expected to witness significant disruption across the industry with VR applications. The technology has showcased potential in improving the healthcare provisions, patient care system, planned surgeries, and medical training, among others.
Its stimulated experience of reflecting the real-world environment is expected to surge the demand in the healthcare industry. The assisted robotic VR is helping the healthcare providers by assisting during surgeries. It also helps by providing surgical training to develop required skills. For instance,
Thus, the trending applications of virtual reality are expected to boost the market expansion.
Growing Live Virtual Entertainment to Drive Market Growth
The concept of live virtual entertainment is evolving worldwide. Today, people are preferring at-home entertainment by adopting technology to access live events or shows. As the technology offers an immersive and real-world environment to the users, its demand for live music concerts, live events, or sports is growing significantly. The concept of live virtual entertainment is evolving worldwide. Today, people are preferring at-home entertainment by adopting technology to access live events or shows. As it offers a virtual world environment to the users, its demand for live music concerts, live events, or sports is growing significantly.
Thus, the growing demand for virtual live entertainment is expected to boost the market expansion.
Requirement of High Power to Hamper Market Growth
The technology demands robust hardware components and high computing power for the proper functioning of devices. However, the majority of current desktop accessories are not compatible with applications. Similarly, most head-mounted displays are wireless and consume high energy, requiring high-energy batteries for long-duration operations. In industries such as gaming and entertainment, it is necessary to have devices with long battery life. Further, the highly connected devices and components require high-speed network bandwidth such as 5G. Thus, lack of suitable speed and power for operating the system might challenge the market growth.
Growing Investments in Advanced Hardware Offerings to Drive Market Growth
Based on component, the market is categorized into hardware, software, and content.
The hardware segment is expected to dominate the global virtual reality market share during the forecast period. The key players are highly investing in the launch and innovation of hardware. For instance, in May 2021, Axon launched its VR-based wireless simulator to provide hands-on training-focused solutions.
The software segment is likely to gain traction owing to the rising demand for immersive technology. The increasing application such as gaming, entertainment, live events, and more is enhancing the software demand. The content segment is likely to witness steady growth during the forecast period due to increasing demand for interactive environment virtual sessions. The industries are demanding new content for applications such as marketing, training, entertainment, gaming, and other sections.
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Capability to Offer Immersive Environment to Fuel Head Mounted Display Demand
Based on device type, the market is categorized into Head Mounted Display (HMD), VR simulator, VR glasses, treadmills & haptic gloves, and others.
HMD is expected to lead the market as it offers the most immersive environment. With technological development, the demand for smartphone-connected virtual reality headsets is growing due to low-cost investments such as Google’s low-cost drawing board-based headsets. The adoption of HMD is significantly growing in industrial applications such as training, marketing, entertainment, and more. For instance, in April 2021, Vajro and VRM Switzerland were officially qualified by the European Union Aviation Safety Agency for virtual aviation training. The companies in collaboration have built a human-eye resolution-based headset for pilot training.
VR simulator is getting highly implemented for training, designing, and prototyping across industries as it helps reduce expenses. For instance, in March 2019, Nissan collaborated with Haptx to provide a realistic car designing virtual simulator to reduce time and investment. Similarly, with the increasing demand, gaming and entertainment industries are vastly adopting treadmills and haptic gloves. This is likely to ensure a highly immersive environment for customers. Therefore, the adoption of VR glasses for training and education is expected to grow during the forecast period.
Growing Investments in Advanced Training Tools to Boost Virtual Systems in Automotive Industry
Based on industry, the market is segmented into gaming, entertainment, automotive, retail, healthcare, education, aerospace & defense, manufacturing, and others.
The gaming and entertainment segments are expected to dominate the market during the forecast period. The existing and new players are highly investing in developing content, software, and hardware specifically for gaming purposes. The rising demand for theme parks, virtual museums, and gaming arcades is further boosting the market growth. Similarly, the retail and education industries are steadily adopting technology for various applications. This is likely to boost the VR market in the near future.
The adoption of technology in the automotive industry majorly caters to the training and education of engineers and technicians. Similarly, the implementation of VR simulators for test driving is boosting showroom customer engagement. For instance, in September 2020, Mercedes-Benz announced a partnership with Microsoft Corporation for its HoloLens 2 VR goggles and Dynamics 365 Remote Assist to improve its customer experience.
The technology has been effectively implemented across the healthcare industry. It provides visual and controlled environments for healthcare workers to perform or diagnose the issue. For instance, healthcare providers are using virtual simulators to understand Alzheimer, help autistic patients, detect impaired vision, and other applications.
North America Virtual Reality Market Size, 2021 (USD billion)
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The global market scope is classified across five regions, North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.
North America is expected to dominate the market share over the forecast period. The significant presence of key players in the U.S. is driving the market growth in the region. Also, various start-ups are entering the U.S. market and offering industry-specific solutions. For instance, in October 2020, California-based small company, Sixense Enterprises Inc., launched a VR-based physical rehabilitation system called the REAL Immersive System. The U.S. government is also investing in virtual technology, which is likely to boost the market. For instance, the U.S. government and its army invested USD 11 billion in providing virtual, augmented, and mixed reality training sessions to its officials.
Asia Pacific shows rapid growth during the forecast period due to the increasing demand for immersive technologies in emerging economies. China is likely to gain maximum market share, as it is one of the major distributors of head-mounted VR devices and other hardware. Also, the developments in 5G networks and infrastructure in China are expected to boost the market opportunities. On the other hand, India is likely to witness significant growth owing to government initiatives and funding. Also, industries, such as entertainment, retail, automotive, education, and more, are collaborating with market players to implement the technology to enhance customer experience. For instance, in May 2021, a Real-Time Engagement (RTE) provider, Agora, Inc., collaborated with HTC VIVE to implement the technology with its RTE to offer an improved experience to businesses and customers.
Europe is likely to show significant growth during the forecast period. The region is the early adopter of virtual solutions in the automotive industry. According to the report published by the European Commission, the European virtual and augmented reality AR industry is expected to increase its production value to USD 38 billion by 2020. The U.K. and Germany are likely to gain traction owing to increasing investment in the market.
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Latin America is expected to gain steady growth owing to increasing government focus on advanced technologies and rapid installation of 5G infrastructure. The growing interest in virtual gaming and entertainment users boosts the demand in the Middle East & Africa.
Focus on Global Expansion with Innovative Products to Boost Market Share
The prominent players in the market are aiming to provide advanced virtual solutions to improve the consumer experience. The key market players such as Microsoft Corporation, Google LLC, Sony Corporation, Unity Technology, Samsung, HTC VIVE, Oculus Quest, Nvidia Corporation, among others, are offering new and innovative products applicable across industries. With the new product launches catering to the maximum application sectors, the market players are expanding their customer bases worldwide. Similarly, the key market players are entering into strategic partnerships, collaborations, and acquisitions to expand their business and product portfolio.
March 2022 – Unity Software Inc. announced partnership with live music creator Insomniac Events to expand into the virtual environment from the physical world. The companies aim to offer live entertainment to the next generation's target audience.
February 2022 – Sony Corporation introduced the new next-gen system, PlayStation VR2, along with its new controller PlayStation VR2 Sense. By incorporating the latest technology in the hardware, the device offers a higher range of sensations to the players.
An Infographic Representation of Virtual Reality Market
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The global virtual reality (VR) market forecast report highlights leading regions across the world to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry and market trends, and competitive landscape and analyzes technologies deployed at a rapid pace at the global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.
Value (USD billion)
By Component, Device Type, Industry, and Geography
By Device Type
The market is projected to reach USD 227.34 billion by 2029.
In 2021, the market size stood at USD 11.64 billion.
The market is projected to grow at a CAGR of 45.2% in the forecast period.
Gaming industry is likely to lead the market.
Growing live virtual entertainment to drive the market growth.
Google LLC, Oculus (Meta Platform, Inc.), Sony Corporation, Unity Technologies, HTC Corporation, Samsung Electronics Co. Ltd., Microsoft Corporation, and others are the top players in the market.
North America is expected to hold the highest market share.
Asia Pacific is expected to grow with a remarkable CAGR.
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