AR/VR Outlook: Painful 2020 but Bright Future Ahead in New Normal

Article By : Strategy Analytics

Smartphone Tethered AR and VR use for collaboration, education, and training drive growth...

Strategy Analytics predicts a strong recovery for the global AR/VR markets in 2021 after COVID-19 driven contraction in 2020. Strategy Analytics released its latest report entitled “Short and Long Term Impacts of COVID-19 on the AR and VR Market”.

Although in the short term, the COVID-19 pandemic will have a negative impact on both AR and VR hardware shipments and revenues, Strategy Analytics expects XR to find a role in the “new normal”, and ultimately, the market for dedicated XR hardware expected to reach $27 Billion by 2025.

Figure 1. Total Global XR Revenues (Augmented Reality and Virtual Reality) (Graphic: Business Wire)Figure 1. Total Global XR Revenues (Augmented Reality and Virtual Reality)

Key findings from the research include:

  • Total XR shipments (the combined VR Headset Forecast and Dedicated AR Headset Forecast) will increase 6 fold through 2025.
  • XR hardware revenues will surpass $28B annually in 2025.
  • Samsung and start-up Nreal and other vendors will commercialize lightweight, consumer friendly AR headsets to drive strong growth in from the mid and low tier once these smartphone tethered devices reach the market.
  • At the lower end of the market, we anticipate 2021-22 seeing a slight comeback of smartphone-tethered VR headsets as a result of 5G launches by mobile operators.
  • Although we have increased our overall forecast for VR headsets, we have decreased slightly our anticipated shipments of console-tethered VR as a result of Microsoft’s decision not to support VR in the next generation Xbox.

David MacQueen, Director of the Virtual and Augmented Reality service at Strategy Analytics noted, “We expect that the launch of smartphone-tethered AR headsets, such as those from Nreal and Samsung seen at CES at the start of the year to ramp up in late 2020/early 2021. We have raised our longer term forecast for XR hardware as a result of new work and life patterns in the ‘new normal.’ Work at home, training, education, and collaboration will all benefit from AR/VR.”

David Kerr, VP at Strategy Analytics added, “Initially attracting a ‘hardcore’ gaming audience willing to spend for a good quality experience, the audience for these devices has since broadened to include enterprises as well. The use of a fully immersive 3D environment started to prove its worth in design, particularly in the fields of engineering, automotive and architecture. Training and education are other verticals where VR has found a home.”

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