Extended Reality (XR) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Extended Reality (XR) Market is segmented by Solution (Consumer Engagement, Business Engagement), Application (Virtual Reality, Augmented Reality, Mixed Reality), End-user Industry (Education, Retail, Industrial and Manufacturing, Healthcare,​ Media and Entertainment), and Geography.

Market Snapshot

Extended Reality (XR) Market
Study Period: 2019- 2026
Base Year: 2021
Fastest Growing Market: Europe
Largest Market: North America
CAGR: 57.91 %

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Market Overview

The extended reality (XR) market was valued at USD 25.84 billion in 2020. It is expected to reach USD 397.81 billion by 2026, registering a CAGR of 57.91% over the forecast period. Extended reality (XR) is among the emerging technologies and encompasses immersive technologies, such as augmented reality, virtual reality, mixed reality, and other future realities that may emerge. One of the main driving factors for the market is the increasing demand for reducing the distance between people and richer visual content.

  • By identifying a great potential in the XR domain, several companies are developing supporting technologies, which may help commercialize XR technologies worldwide. For instance, in December 2021, Mawari, a leading XR streaming solution provider, announced that its 3DXR Content Streaming Platform for the Metaverse made its debut on the AWS Marketplace. A managed and curated software catalog from Amazon Web Services allows customers to find, buy, and immediately deploy third-party software.
  • The North American region has been an early adopter of the latest immersive technologies such as augmented reality, virtual reality, and mixed reality that drive the market. Moreover, the region also has a stronghold on various vendors such as Qualcomm Technologies Inc., Softserve, SphereGen, and Northern Digital Inc.
  • Physical lockdowns across the significant regions may positively affect the XR technology demand, and enterprises worldwide are trying to find ways to get their internal and wider geographically spread teams to communicate, collaborate, and find a path forward during the crisis. The diverse potential of XR application in terms of recreating the tourism experience allows multi-stakeholders to overcome travel restrictions and lockdown, allowing the crisis to act as an accelerator of the existing trends for XR adoption.

Scope of the Report

The advent of extended reality is revamping the way people experience the physical and the virtual environments, from observation to immersion. Extended Reality (XR) implementation provides enterprises with a platform that helps people perform their jobs effectively. The market study comprises the solution, applications, and end-users. The assessment of the covid-19 study has also been covered in the study along with geographical analysis.

By Solution
Consumer Engagement
Business Engagement
By Application
Virtual Reality (VR)
Augmented Reality (AR)
Mixed Reality (MR)
By End-user Industry
Industrial and Manufacturing
Media and Entertainment
Other End-user Industries
By Geography
North America
Asia Pacific
Rest of the World

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Key Market Trends

Virtual Reality segment to drive the market

  • Virtual reality technology involves the usage of computer technology to create a simulated environment. Unlike the traditional user interfaces, VR places the user inside an experience. This means that users are immersed in and can interact with a three-dimensional world instead of viewing a monitor screen in front of them. With the simulation of multiple senses as possible, such as touch, vision, hearing, and smell, the usage of this technology has been transformed.
  • Moreover, across various educational fields, teachers have been increasingly turning to virtual reality technology, primarily to help provide a better standard of education. For instance, on a basic level, the introduction of VR in the education sector has enabled students to be immersed in a VR environment far away from the confines of physical classrooms. The technology also gives students a more visual and absorbing lesson, which can be provided at lower costs.
  • Virtual reality technology has also carved its space within the gaming industry in the past few years. VR has given shape to a newer gaming generation that offers players an immersive, first-person perspective experience. In the last few years, developers, such as Oculus and HTC, have made virtual reality more accessible and more affordable. Oculus also launched its Oculus Quest, a standalone wireless virtual reality headset.
  • Moreover, the growing pervasiveness of AI technology across VR applications also enhances virtual characters' intelligence. Google's machine learning tools add 6DoF controller-tracking capabilities to any standalone headset, while Facebook's DeepFocus framework makes usage of AI to create focus effects in VR, and LG makes usage of AI to minimize motion sickness among VR users. The Chinese tech giants Baidu and Tencent have also been working toward integrating AI and VR into mobile solutions and video games.
  • Cloud technologies are also promising scalability to the VR vendors. As VR-generated data increases in volume, the cloud services will store apps, data, and memory in virtual servers and stream them on-demand. This is also expected to drive innovation in VR and service updates in an uninterrupted cycle.
Extended Reality (XR) Market

North America Holds a Significant Market Share

  • The North American region of the extended reality market is expected to grow significantly over the forecast period, primarily due to the presence of multiple vendors making considerable investments in market innovations, such as Microsoft and Qualcomm, among others. Countries such as the United States have been one of the highly innovative Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR) markets. Most of the companies advancing in this technology are based out of the United States. Higher technology exposure and ease of smart devices have created a strong demand in the region. Microsoft’s AR product, Hololens, first released in the United States and Canada, received a positive response from users.
  • The region is also expected to hold a significant market share. The US Government has found direct and indirect ways to use these technologies to facilitate innovations and promote prosperity. Moreover, the Foreign Service Institute at the State Department introduced VR as an experiential learning tool in specific training. Moreover, various AR and VR training programs have been implemented to develop local workforces and manage wastewater. The region is also dominating the market owing to its higher technology exposure and easy availability of resources, which created a robust demand for comprehensive reality solutions. Several companies in the region are deploying innovative technology into their AR/VR wearables.
  • Further, with the increasing use of smart glass and head-up displays, the market for extended reality has gained traction. Smart glass is a crucial segment witnessing a considerable penetration of AR technologies in the region and is anticipated to grow significantly during the forecast period. For instance, in early 2018, Snapchat unveiled its two new AR-based smart glasses, Nico and Veronica, expanding its Spectacles 2 line-up.
  • Also, in Dec 2021, Vuzix Corporation, a supplier of Smart Glasses and Augmented Reality (AR) technology, announced that it signed a distribution agreement with Barcotec GmbH, which is a European supplier of innovative hardware, device management cloud, and a complete service package to regional and international companies and institutions, receiving and shipping an initial order for its Vuzix Smart Glasses.
Extended Reality (XR) Market

Competitive Landscape

The Extended Reality (XR) market is concentrated and consists of a few players. Some of the players are currently expanding their services across the emerging market in terms of market share. However, with the advancement in the immersive technology trend across the virtual platform, new players are increasing their market presence, thereby enhancing their services and expanding their business footprint across the emerging economies.

  • December 2021 - Oppo unveiled the Air Glass, Augmented Reality (AR) glasses that feature a Cicada Wing Design and an internally developed Spark Micro Projector. The Air Glass offers diffraction, waveguide display that supports touch, voice, head tracking, and gestures. The frame uses a monocle design for the glass, with an attachable AR capable display that latches on to existing prescription glasses. Furthermore, integration with the rest of their ecosystem has enabled the company to enable seamless consumer experiences. For instance, When an Air Glass is paired with an Oppo Watch 2, users can use hand movements to confirm, cancel, and switch application cards.
  • December 2021 - Solotech acquired XR Studios, a full-service agency specializing in extended reality, which is comprised of augmented reality technology for live broadcast and virtual productions. As part of the strategic plan, XR Studios will continue to operate as a separate entity and brand, progressing its strong trajectory in market leadership. The transaction accelerates the path of Solotech and XR Studios' visions to become the leading provider of extended reality solutions across the globe.
  • November 2021 - Immersivecast announced the XR Metaverse Workspace, a service environment that exists to support multi-dimensional Web 3.0 with NFT, AR, VR and simplify the content development process. The offering was revealed on an initial 5G network slicing trial with Deutsche Telekom, Samsung, and Ericsson at MWC 2021 and encouraged the company to expand its market presence in Korea and the US.

Recent Developments

  • September 2021 - Facebook Inc. announced it would invest USD 50 million to work with organizations to sustainably construct the so-called metaverse, a digital world in which people may move and communicate in a virtual environment using various devices. The corporation has put a lot of money into virtual reality and augmented reality, creating Oculus VR headsets and working on AR glasses and wristbands. The money will be invested globally over two years by the new XR Programs and Research Fund to ensure that metaverse technology is "developed in a way that is inclusive and empowering.
  • July 2021 - Ultraleap, a company that hand-tracking haptic technology for Extended Reality (XR) with Qualcomm, and Varjo, among others, announced that they completed their Series D funding round that raised USD 50 million from Frame Investments, a subsidiary of Tencent. The company intends to maximize the surge for remote and contactless engagement in the post-pandemic world.

Table of Contents


    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study




    1. 4.1 Market Overview

    2. 4.2 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.2.1 Bargaining Power of Suppliers

      2. 4.2.2 Bargaining Power of Buyers

      3. 4.2.3 Threat of New Entrants

      4. 4.2.4 Threat of Substitute Products

      5. 4.2.5 Intensity of Competitive Rivalry

    3. 4.3 Technology Snapshot

    4. 4.4 Assessment of the Impact of COVID-19 on the Market


    1. 5.1 Market Drivers

      1. 5.1.1 Increasing Adoption of Gesture Based Computing

      2. 5.1.2 Growing Trend of Miniaturization in Smart Devices

    2. 5.2 Market Restraints

      1. 5.2.1 Complexity in the Implementation Process in Terms of Technology and Cost

      2. 5.2.2 Vulnerability for Cyber Attacks, Along with the High Cost of Implementation


    1. 6.1 By Solution

      1. 6.1.1 Consumer Engagement

      2. 6.1.2 Business Engagement

    2. 6.2 By Application

      1. 6.2.1 Virtual Reality (VR)

      2. 6.2.2 Augmented Reality (AR)

      3. 6.2.3 Mixed Reality (MR)

    3. 6.3 By End-user Industry

      1. 6.3.1 Education

      2. 6.3.2 Retail

      3. 6.3.3 Industrial and Manufacturing

      4. 6.3.4 Healthcare

      5. 6.3.5 Media and Entertainment

      6. 6.3.6 Other End-user Industries

    4. 6.4 By Geography

      1. 6.4.1 North America

      2. 6.4.2 Europe

      3. 6.4.3 Asia Pacific

      4. 6.4.4 Rest of the World


    1. 7.1 Company Profiles

      1. 7.1.1 Qualcomm Technologies Inc.

      2. 7.1.2 Accenture PLC

      3. 7.1.3 SoftServe Inc.

      4. 7.1.4 SphereGen Technologies

      5. 7.1.5 Northern Digital Inc.

      6. 7.1.6 Microsoft Corporation

      7. 7.1.7 Softweb Solutions Inc.

      8. 7.1.8 VertexPlus Softwares Pvt. Ltd.

      9. 7.1.9 Varjo Technologies OY

      10. 7.1.10 Talespin Reality Labs Inc.

    2. *List Not Exhaustive


**Subject to Availability

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Frequently Asked Questions

The Extended Reality (XR) Market market is studied from 2019 - 2026.

The Extended Reality (XR) Market is growing at a CAGR of 57.91% over the next 5 years.

Europe is growing at the highest CAGR over 2021- 2026.

North America holds highest share in 2020.

Qualcomm Technologies Inc., Accenture PLC, Northern Digital Inc., SoftServe Inc., SphereGen Technologies are the major companies operating in Extended Reality (XR) Market.

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