AR & VR - Estonia

Estonia

In Estonia, revenue in the AR & VR market market is projected to reach US$14.1m in 2024.
Revenue is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of 10.80%, leading to a projected market volume of US$23.5m by 2029.
The largest market within this market in Estonia is AR Software, which is expected to have a market volume of US$4.5m in 2024.
Although most revenue is generated the United States, Estonia's market is also significant with a projected volume of US$10,900.0m in 2024.
In the AR & VR market market, the number of users in Estonia is expected to reach 756.6k users by 2029.
User penetration in Estonia will be 56.6% in 2024 and is anticipated to increase to 58.4% by 2029.
The average revenue per user (ARPU) in Estonia is expected to amount to US$18.8.
Estonia's burgeoning AR and VR market is increasingly attracting innovative startups, positioning the country as a leader in immersive technology solutions in Europe.

Definition:

Augmented reality (AR) and virtual reality (VR) make it possible to combine the real and virtual worlds. AR is generally accessed via mobile phones and primarily relies on lenses. AR effects can be created by using lenses in social media apps, for example. AR is also used for displaying digital 3D objects in our surroundings, e.g., in gaming or eCommerce apps. Meanwhile, VR technology allows users to dive into the virtual world, and, unlike AR technology, it requires a headset device which enables the creation of virtual worlds.

Structure:

The AR & VR market consists of six different markets: AR Advertising, AR Hardware, AR Software, VR Advertising, VR Hardware, and VR Software. AR Advertising covers mobile advertising that is displayed in the most prominent social media apps. AR Hardware comprises AR headsets and glasses. AR Software is divided into three different application types, namely social media, gaming, and eCommerce applications, which can be accessed via the most prominent app stores. VR Advertising covers in-game advertising as well as advertising in VR videos. VR Hardware comprises both tethered head-mounted displays (HMDs) and stand-alone HMD headsets. Lastly, VR Software covers VR games and VR videos, which require headsets.

Additional information:

The market comprises revenues, users, average revenue per user, and penetration rates. Revenues are generated through in-app purchases, advertising spending, and consumer spending on apps, games, and hardware such as headsets or glasses. Sales channel data shows both online and offline revenues, which include VAT. The market only displays B2C revenues and users for the above-mentioned markets and markets; B2B and B2G revenues are not included. Additional definitions for each market can be found on the respective market pages.
Market numbers for VR headsets are also featured in the Consumer Market Insights, namely in the Gaming Equipment market of the Consumer Electronics market. Unlike the VR Hardware market in the Advertising & Media Outlook, the Gaming Equipment market also covers smartphone VR devices.
Key players in the market include companies such as Meta (Oculus VR), Microsoft (HoloLens), Snap Inc. with different lenses, and Nvidia, which offers computing hardware components.
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Analyst Opinion

The AR & VR market in Estonia is witnessing significant growth and development, driven by customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Estonia are increasingly drawn to the immersive experiences offered by AR and VR technologies. The younger population, in particular, is showing a strong interest in these technologies, seeking out virtual reality gaming experiences and augmented reality applications for entertainment and education purposes. Additionally, businesses across various sectors are recognizing the potential of AR and VR technologies to enhance customer engagement and improve operational efficiency.

Trends in the market: One of the key trends in the AR & VR market in Estonia is the adoption of these technologies in the tourism and hospitality industry. Virtual reality tours and augmented reality guides are being used to provide immersive experiences for tourists, showcasing the country's rich cultural heritage and natural beauty. This trend is expected to continue as Estonia aims to attract more international visitors. Another trend is the integration of AR and VR technologies in the healthcare sector. Virtual reality is being used for pain management and rehabilitation purposes, while augmented reality is being utilized for surgical planning and medical training. These applications are improving patient outcomes and enhancing the efficiency of healthcare professionals.

Local special circumstances: Estonia has a strong digital infrastructure and a tech-savvy population, which creates a favorable environment for the growth of the AR & VR market. The country is known for its innovative startup ecosystem and has a number of companies specializing in AR and VR technologies. This fosters collaboration and knowledge sharing, driving further development and innovation in the market.

Underlying macroeconomic factors: Estonia's strong economic growth and government support for the technology sector are contributing to the development of the AR & VR market. The country has a favorable business environment and offers various incentives and grants to attract foreign investment and promote innovation. This enables AR and VR companies to thrive and expand their operations in Estonia. In conclusion, the AR & VR market in Estonia is experiencing significant growth and development, driven by customer preferences for immersive experiences, trends in the market such as adoption in the tourism and healthcare sectors, local special circumstances including a strong digital infrastructure and innovative startup ecosystem, and underlying macroeconomic factors such as strong economic growth and government support for the technology sector.

Methodology

Data coverage:

The data encompasses B2C enterprises. Figures are based on the AR & VR market. AR and VR enable consumers to experience a new dimension, using either a headset or installed units, as they combine the real and virtual worlds. Consumer revenue figures refer to revenues relating to AR hardware, AR software, VR hardware, VR software, and spending on AR and VR advertising. Both digital and non-digital revenues are included.

Modeling approach / Market size:

Market sizes are determined through a top-down approach, building on specific predefined factors for each market market. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and industry associations, as well as third-party studies and reports. In addition, we use relevant key market indicators and data from country-specific associations, such as consumer spending, internet penetration, 4G coverage, and historical developments. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption. The main drivers are level of digitalization, adoption of technology, GDP per capita, and internet penetration.

Additional notes:

The market is updated twice a year in case market dynamics change. The data is modeled using current exchange rates. The impact of the COVID-19 pandemic and the Russia-Ukraine war are considered at a country-specific level. In some cases, the data is updated on an ad hoc basis (e.g., when new, relevant data has been released or significant changes within the market have an impact on the projected development).