AR & VR - NAFTA

NAFTA

In NAFTA, the revenue in the AR & VR market market is projected to reach US$12.6bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 8.61%, resulting in a projected market volume of US$19.0bn by 2029.
The largest market within this market is AR Software, which is expected to have a market volume of US$4.5bn in 2024.
With a projected market volume of US$10,900.0m in 2024, the majority of revenue is generated the United States.
In the AR & VR market market, the number of users in NAFTA is expected to amount to 396.6m users by 2029.
User penetration will be 72.8% in 2024 and is anticipated to reach 75.5% by 2029.
The average revenue per user (ARPU) is expected to amount to US$33.8.
The United States is experiencing a surge in AR & VR investment, driven by increasing demand for immersive experiences across entertainment and education sectors.

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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Region comparison

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Analyst Opinion

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

Customer preferences: Customers in the NAFTA region are increasingly embracing AR & VR technologies due to their immersive and interactive nature. These technologies provide users with unique and engaging experiences, allowing them to explore virtual worlds, interact with digital objects, and enhance their gaming and entertainment experiences. Additionally, AR & VR technologies are being adopted in various industries such as healthcare, education, and retail, where they offer innovative solutions and improve customer experiences.

Trends in the market: One of the key trends in the AR & VR market in NAFTA is the increasing adoption of these technologies in the healthcare sector. AR & VR applications are being used for medical training, surgical simulations, and patient rehabilitation, offering healthcare professionals new ways to enhance their skills and improve patient outcomes. Another trend is the integration of AR & VR technologies in the retail industry, where they are being used to create virtual showrooms, enhance product visualization, and improve the overall shopping experience.

Local special circumstances: The NAFTA region is home to several major players in the AR & VR industry, including technology giants and startups. This concentration of companies and expertise in the region has created a favorable environment for the growth of the AR & VR market. Additionally, the region has a large consumer base with high disposable incomes, making it an attractive market for AR & VR products and services. Furthermore, the NAFTA region has a strong culture of innovation and technology adoption, which further contributes to the development of the AR & VR market.

Underlying macroeconomic factors: The growth of the AR & VR market in NAFTA is also influenced by underlying macroeconomic factors. The region has a stable and growing economy, which provides a conducive business environment for companies operating in the AR & VR industry. Additionally, the region has a well-developed infrastructure and advanced telecommunications networks, which enable the delivery of high-quality AR & VR experiences. Furthermore, the NAFTA region has a highly skilled workforce and a strong education system, which supports the development and adoption of AR & VR technologies. In conclusion, the AR & VR market in NAFTA is experiencing significant growth and development due to customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. The increasing adoption of AR & VR technologies in various industries, such as healthcare and retail, is driving the market growth. The concentration of AR & VR companies in the region, along with a large consumer base and a culture of innovation, further contribute to the market development. Additionally, the stable economy, advanced infrastructure, and skilled workforce in the NAFTA region provide a favorable environment for the growth of the AR & VR market.

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).