Key Takeaways

• The size of the global extended reality (XR) market, which represents all immersive technology markets including virtual reality (VR), augmented reality (AR), and mixed reality (MR), is estimated at $30.7 billion in 2021.
• Based on market share, the top five extended reality brands across the globe are Oculus, Sony (PlayStation VR), HTC (VIVE), DPVR, and Pico.
•  55% of brands in the EMEA region say they are investing in AR or VR as a marketing asset.
• In the VRX Industry Insight Report 2019-2020, 93% of enterprise users said virtual reality (VR) had a positive impact on their business. In addition, 88.4% of enterprise users said AR/MR had a positive impact on their business.
•  84.2% of enterprise users that participated in the XR Industry Survey 2019 said they use VR in sales & marketing/external communications.

Introduction

Key Terms & Definitions

Immersive Experience

• An immersive experience "pulls a person into a new or augmented reality, enhancing everyday life (by making it more engaging or satisfying) via technology." Immersive technologies include Augmented Reality (AR), Virtual Reality (VR), Mixed/Hybrid Reality (MR), Digital Twins, and 360º Content.

Extended Reality (XR)

• Extended reality (XR) is an umbrella term that describes "all immersive technologies that can merge the physical and virtual worlds." This includes the immersive technologies that exist today, including virtual reality (VR), augmented reality (AR), and mixed reality (MR), as well as "those that are still to be created. All immersive technologies extend the reality we experience by either blending the virtual and “real” worlds or by creating a fully immersive experience."

Augmented Reality (AR)

• "In augmented reality, virtual information and objects are overlaid on the real world. This experience enhances the real world with digital details such as images, text, and animation." The AR experience can be accessed via special AR glasses or screens, tablets, and smartphones.
• Popular examples include the "Pokémon GO game that overlays digital creatures onto the real world," photo and video filters such as Snapchat Lenses, head-up displays, IKEA Place app, Sephora Virtual Artist, and "3D product demos and projections via headsets/glasses."

Virtual Reality (VR)

• "In a virtual reality experience, users are fully immersed in a simulated digital environment. Individuals must put on a VR headset or head-mounted display to get a 360 -degree view of an artificial world that fools their brain into believing they are, e.g., walking on the moon, swimming under the ocean or stepped into whatever new world the VR developers created."
• Some examples of VR include "360-degree videos, photos and product demos via any device (e.g., connected TVs, desktops/laptops, mobile devices, and headsets), and games via headsets. Examples of VR headsets include Google Cardboard, Google Daydream View, HTC Vive, Oculus Go, Oculus Quest, Oculus Rift, and PlayStation VR."

Mixed/Hybrid Reality (MR)

• "In mixed reality, digital and real-world objects co-exist and can interact with one another in real-time. This is the latest immersive technology and is sometimes referred to as hybrid reality. It requires an MR headset and a lot more processing power than VR or AR." An example of MR is Microsoft's HoloLens which allows users to place digital objects into the room they are standing in, enabling them to "interact with the digital object in any way possible."

I — Global Immersive & Virtual Reality/Experiences Market

Market Size

• The size of the global extended reality (XR) market, which represents all immersive technology markets including virtual reality (VR), augmented reality (AR), and mixed reality (MR), is estimated at $30.7 billion in 2021.
• According to a recent report released by Mordor Intelligence, this market was sized at $26.05 billion in 2020, up from nearly $19 billion in 2019.
• The consumer segment of this market was valued at around $6.3 billion in 2020.
• Within the consumer segment, virtual reality (VR) is the largest segment bringing in $2.6 million in revenue in 2020. This was followed by the consumer AR segment with $3.7 billion in revenue.

 

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Market Growth

• The global XR market is forecast to grow at a healthy CAGR of 62.67% to reach $463.7 billion by 2026. Another report by Transparency Market Research estimates that this market will surpass $1.1 trillion by the end of 2030.
• This impressive growth can be attributed to the increased use of "connected devices and smartphones, increasing adoption of virtual reality (VR)/augmented reality (AR) solutions, and the growing number of collaborations being announced among the market players".

Category/Segment-Wise Revenue

Global VR Revenue

• A recent report from ARtillery Intelligence provides insights into the global "VR revenue totals and subsegments — including consumer and enterprise spending." According to this report, the global consumer and enterprise virtual reality (VR) revenue was recorded at $3.885 billion in 2020, down from $4.985 in 2019 as a result of supply chain disruptions and COVID-19 restrictions.
• This year, the global VR market will bounce back with revenues expected to grow to $4.84 billion. ARtillery Intelligence predicts that the global VR revenues will grow at a CAGR of 19.6% to reach $12.19 billion by 2024.
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• Estimated at $2.7 billion out of the total global VR revenue of $3.885 in 2020, the consumer hardware and software segment accounts for the highest share of global VR revenues across the world. This is driven by the dominance of gaming in the VR industry.
 
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Global AR Revenue

• The global headworn AR market was valued at $822 million in 2019 and $1.35 billion in 2020. By 2024, this market is expected to reach $13.4 billion. Based on the end-user industry, this market is dominated by the enterprise segment with an estimated $1.33 billion revenue in 2020, compared to a consumer spending of $22.1 million.
• On the other hand, the global mobile AR market was valued at $3.99 billion in 2019 and $6.16 billion in 2020. By 2024, this market is expected to reach $21.02 billion. As of 2020, the leading revenue categories in this market are enterprise productivity ($2.58 billion), AR advertising ($1.41 billion), and consumer in-app purchases ($1.38 billion). Player spending in the popular game, Pokémon Go., makes up most of the consumer in-app purchase revenue.
• ARtillery Intelligence estimates that "advertising will be the leading mobile AR revenue category by 2024 ($8.02 billion) as brands continue to recognize AR's ability to demonstrate products in visually immersive and conversion-boosting ways."

 

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Global AR/VR Spending by Segment

• Based on end-users, the global augmented and virtual reality (AR/VR) is categorized into the consumer, distribution and services, manufacturing and resources, public sector, infrastructure, and other segments.
• The consumer segment accounts for more than half of the global spending on AR/VR. In 2020, global spending in this segment accounted for an estimated 53% of the global AR/VR spending.
• This was followed by the commercial segments such as the distribution and services segment accounting for 15.8% of the global AR/VR spending, manufacturing and resources segment (13.8%), public sector (12.7%), infrastructure segment (3.2%), and other segments (1.6%).

 

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• The total global spending on AR/VR in 2020 was estimated at $12 billion in 2020. The International Data Corporation (IDC) forecasts that this spending will increase at a CAGR of 54% from 2020 to 2024 to reach $72.8 billion by 2024.
• Global spending in the consumer AR/VR segment was estimated at $6.36 billion in 2020, followed by $1.90 billion in the distribution and services segment, $1.66 billion in the manufacturing and resources segment, $1.52 in the public sector, $0.38 in the infrastructure segment, and $0.19 billion in other segments.

 

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Global AR/VR Forecasted Spending by Segment

• According to IDC, consumer spending will continue to account for the largest share of the total global AR/VR market over the forecast period (2020-2024). However, "much of the growth in AR/VR spending will be driven by investments from the commercial and public sectors."
• "Retail will deliver the largest commercial investment at $7.3 billion in 2024, while discrete and process manufacturing will see spending levels of $5.9 billion and $5.1 billion, respectively." Other "commercial use cases that are forecast to receive the largest investments in 2024 are training ($4.1 billion), industrial maintenance ($4.1 billion), and retail showcasing ($2.7 billion)." Additionally, "banking (126.7% CAGR), securities and investment services (106.1% CAGR) industries, and federal/central government (102.5% CAGR)" industries will register the strongest spending growth from 2020-2024.
• IDC further estimates that consumer spending will grow at a CAGR of 34.1% from 2020-2024. "The three consumer use cases for AR/VR (VR gaming, VR video/feature viewing, and AR gaming) are expected to see combined spending of $17.6 billion in 2024. The use cases that will see the fastest spending growth over the forecast period are internal videography and logistics and package delivery management with CAGRs of 101.0% and 100.5% respectively."

Geographic Breakdown of AR/VR Spending

• In 2020, China accounted for more than half of the global AR/VR spending making it the top spending region in the global market. China will remain the top spending region in 2024, however, its share in the global market is estimated to decline to 36% by 2024.
• The United States will be the second-largest region for AR/VR spending by 2024.

Global AR/VR Headset Shipments

• A March 2020 report estimates that a total of 7.06 million units of AR and VR headsets were shipped across the globe in 2020. This shows a 23.6% increase from 2019.
• By 2024, the number of AR and VR headset shipments is expected to grow to 76.7 million units.
• The most popular headsets are VR standalone head-mounted displays (HMDs) with 3.09 million units sold in 2020. By 2024, this number is estimated to reach 25.3 million.
• A detailed breakdown of predicted growth by the type of AR and VR headsets can be found below.

 

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Global Immersive Entertainment

• "Immersive entertainment" is an emerging sector of the overall entertainment industry that provides an indication of the state of themed and location-based immersive experiences. The most recent data available on this emerging industry has been published in the 2020 Immersive Entertainment Industry Annual Report. However, this report provides insights into the immersive entertainment industry before the onset of the pandemic.
• According to this report, the size of the global immersive entertainment industry was estimated at $61.8 billion in 2019. The theme park market was the largest segment of this industry with a market value of $52 billion in 2019. This was followed by VR and AR (discussed above in detail), haunted attractions (over $1.1 billion), escape rooms ($656 million), immersive theatre ($28.1 million), and experiential art museums ($28 million), among others.
• The report indicates that in total, around 775 new immersive projects were created in 2019.

II — Global Immersive & Virtual Reality/Experiences Market — Key Brands

• According to recent data released by Counterpoint’s Global XR Model Tracker, the top five extended reality (XR) brands across the globe are Oculus, Sony (PlayStation VR), HTC (VIVE), DPVR, and Pico.

 

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Oculus

• A link to the website of Oculus VR (Oculus) can be found here.
• Founded in 2012 in California, US, Oculus VR is a leader in the virtual reality hardware and software market. Soon after it entered the market, it was acquired by Facebook in 2014 for $2.3 billion. Today, it leads the global extended reality (XR) market with a market share of 53.5%.
• It has been featured on Fast Company's Most Innovative Companies list multiple times.
• Oculus has partnerships with major tech giants including Microsoft and Samsung. Some clients of the company include Nestlé Purina, Johnson & Johnson Institute, and Hilton.
• The company's product portfolio includes the Oculus Rift S headset for PC-powered VR gaming as well as the standalone, all-in-one VR headset Oculus Quest 2 that can be operated using a smartphone app and does not need a PC to operate.
• In addition, Oculus offers games, apps, and experiences through the Oculus Store as well as accessories including head straps, charging docks, controllers, VirtuClear® lens inserts, cables, headsets, earphones, replacement kits, power adapters, and carrying cases.
• For businesses, Oculus offers a scalable VR platform, Oculus for Business, that is built on enterprise-grade Workplace by Facebook. Oculus for Business is supported by a "growing ecosystem of independent software vendors (ISVs) that have the expertise to create immersive VR experiences" for businesses.

Sony (PlayStation VR)

• A link to the website of PlayStation VR, Sony's key product in the extended reality market, can be found here.
• PlayStation VR is offered by Sony Interactive Entertainment (SIE), a subsidiary of the Sony Group Corporation. SIE is based in California and has operations across the globe. With a market share of 11.9%, Sony is the second-largest payer in the global extended reality market.
• The company sells PlayStation VR directly to consumers. As of March 3, 2019, it has sold more than 4.2 million PlayStation VR systems worldwide.
• PlayStation VR is a combination of a VR headset, controllers, and a "camera that handles motion tracking, and the PlayStation 4 (or PS4 Pro) console." In addition to PlayStation VR games, Sony also offers a range of PlayStation VR experiences, PlayStation VR Live for live sporting action, and PlayStation VR accessories including PlayStation Camera, PS VR aim controller, and PlayStation Move.

HTC VIVE

• A link to HTC VIVE can be found here.
• HTC offers VR software, hardware, and content through HTC VIVE, a "VR platform and ecosystem that creates true-to-life VR experiences for businesses and consumers." With a market share of 5.7%, HTC is the third-largest player in the global extended reality market.
• Some of its clients include FLAIM Systems, Adidas, and Bugatti.
• HTC VIVE offers VR headsets such as the VIVE Pro Series Professional-Grade PC-VR, VIVE Focus Series all-in-one enterprise solutions, VIVE Cosmos Series PC-VR system with modular options, VIVE Series mainstream PC-VR for gamers, and VR accessories.
• Other solutions include the VIVEPORT platform and app store for VR games and apps, VIVE Enterprise Solutions such as VIVE Sync (an all-in-one VR meeting and collaboration solution), VR tackers, and VIVE ARTS for cultural initiatives. The company is also working on VIVE Ready Computers.

DPVR

• A link to the website of DPVR can be found here.
• Founded in 2014, DPVR is an artificial intelligence and VR technology company. It is based in Shanghai, China, and serves customers in more than 100 countries. With a market share of 5.5%, DPVR is among the top five brands in the global extended reality market.
• Some of the company's clients include the Palace Museum and Reality Technologies. The company claims that over 5,000 VR machines and simulators are built with DPVR headsets.
• DPVR offers wearable VR glasses and helmets, VR software, hardware equipment, and VR solutions for interactive entertainment experiences.
• Its product portfolio features PC-VR headsets and all-in-one VR equipment including P1, P1 PRO-4K, E3-4K, E3-P, E3-B, E3-C, and M2 Pro headsets, the VR pan-entertainment content platform 3DBoBo, and VR programs and content for the public welfare, cloud, fitness, education, tourism, medical, and decoration sectors.
• The company also offers Wireless VR Broadcasting solutions for enterprises, DPVR Wireless Screening Tools, the DPVR Assistant.

Pico

• A link to the website of Pico can be found here.
• Founded in 2015, Pico is a developer of innovative VR solutions and Interactive CGI experiences. It is based in California and has operations in the United States, Europe, China, South Korea, and Japan. The company has 300 employees in its seven offices across the globe.
• With a market share of 4.8%, Pico is among the top five brands in the global extended reality market.
• Some of Pico's clients include VR Coaster, Inflight VR, Limbix, NuEyes, Cayceo, and Rescape among others.
• The company offers VR enterprise solutions for businesses located in the US, Canada, Europe, Asia, and Africa. It also offers VR headsets for personal use in the Asian region and the Pico VR Streaming Assistant to wirelessly stream SteamVR games.
• Pico's products include VR headsets and technology such as the all-in-one Neo 2 VR headset, the Neo 3 Pro headsets with cross-platform capabilities, and the G2 4K and G2 4K Enterprise headsets with 4K resolution.
• Other enterprise offerings include device customization, hands-free controls that do not need a controller, Kiosk Mode, remote device management, and "replaceable PU face inserts that are easy to clean and hygienic for mass use." It also offers the Pico Enterprise Management Program, a managed solution for businesses for custom features and support.

III — US Immersive & Virtual Reality/Experiences Market

Number of Users

• According to the latest data released by eMarketer, an estimated 93.3 million Americans (or 28.1% of the US population) will use AR this year. This shows an 11.5% increase in the number of AR users in the country from 83.7 million in 2020.
• eMarketer further estimates that 58.9 million Americans (or 17.7% of the US population) will use VR at least once per month in 2021. This represents a 17.3% increase from 50.2 million users in the country in 2020.
• Another report by ARtillery Intelligence states that 19% of US consumers bought or used a VR headset in 2020, up from 16% in 2019.

  

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Market Growth

• According to a market research report published by GMD Research, the North American extended reality (XR) market is estimated to grow at a CAGR of 42.5% to reach $132.39 billion by 2026.
• In 2019, the North American region observed the highest growth in the global extended reality market. This growth can be attributed to the "widespread adoption of VR and AR solutions, the existence of prominent market players, and the large-scale adoption of several immersive technologies in multiple industries including mining, construction, and oil and gas industries, for training and development purposes."

Immersive Experiences & AR/VR Spending

• According to the 2020 Immersive Entertainment Industry Annual Report, a majority of customers in the US i.e., 30.6% spent $25-$49 on each immersive experience in 2019. Overall, 65.9% of US consumers spent less than $50 on each immersive experience.
• 17.7% of customers spent $50-$99 and 16.3% spent more than $100 on each immersive experience in 2019.

 

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• Findings from separate surveys of creators and attendees of immersive experiences further indicate that "the most common price consumers have become used to paying for attendance to [an] immersive experience is around $50." Immersive experiences that cost more than $150 risk limiting the number of attendees. In fact, 60% of consumers say they have never paid more than $150 for a single immersive experience.
• For VR users, the demand for VR equipment "inflects at $400 and $200."
• The XR Industry Survey 2019 released by VR Intelligence provides valuable insights from leading XR professionals that participated in the 2019 VRX conference and expo in the US. According to this survey, 46.2% of XR professionals consider the price of devices the biggest barrier to mass consumer adoption of extended reality (XR) technology.

Consumer Behavior — Immersive Experiences

• According to the 2020 Immersive Entertainment Industry Annual Report, the highest concentration of self-identified fans of immersive entertainment in the US can be found in Los Angeles and New York City. Other cities with high concentrations of immersive entertainment fans include Denver, Salt Lake City, and San Francisco.
•  86.3% of self-identified fans of immersive entertainment travel occasionally (69.4%) or frequently (16.9%) to attend immersive experiences.
•  89% of respondents of the immersive entertainment industry survey attended 3 or more immersive experiences in 2019, 48% attended 10 or more immersive experiences, and 3.7% said they attended 50 or more experiences in 2019.
• In 2019, immersive theatre was the most liked type of immersive experience with 51.5% of respondents selecting immersive theatre as their favorite type of immersive experience.

 

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• Consumers generally have a positive attitude towards the marketing of immersive experiences. 33.4% of respondents say immersive experiences are accurately marketed. However, 18.2% of respondents say these experiences are frequently over-marketed.

Consumer Behavior — Immersive Tech/Content

• When it comes to immersive technologies, 55% of American VR users in a 2020 study said they are highly satisfied with their VR experience.
•  VR content streaming and AR experiences are cited among expected benefits of 5G technology by 44% and 35% of Americans respectively.
• In a January 2020 poll conducted by Parks Associates, 73% of respondents from the US, UK, and South Korea found a "subscription to VR experiences appealing or very appealing, while 70% and 65%, respectively, said the same for AR experiences and VR sports."
• 55% of respondents in a Deloitte study said AR makes shopping more fun and exciting, 71% said they would shop more frequently if they used AR apps, 61% said they prefer stores with AR over those without it, and 40% said they would pay more for a product if they could test it through AR before buying.
• In a 2019 survey, nearly 76% of consumer XR content creators said VR had a positive impact on their business. 72.3% said the same for AR/MR.

Enterprise Usage & ROI

• According to the VRX Industry Insight Report 2019-2020, enterprise end-users of virtual reality (VR) typically observe a strong ROI. In fact, 93% of enterprise users say virtual reality (VR) had a positive impact on their business. In addition, 88.4% of enterprise users say AR/MR had a positive impact on their business.
• A whopping majority (98.6%) of enterprise users are considering investing more into extended reality in the next few years. Among these, 65.7% are confident of making future investments into XR.

 

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•  73% of XR technology and content suppliers say they are working on VR projects for enterprises and 65% are working on AR and MR for enterprise functions.
•  84.2% of enterprise users that participated in the XR Industry Survey 2019 said they use VR in sales and marketing/external communications. Other common areas of usage include product design and prototyping (96.3%), workforce/project collaboration (93.4%), educational learning (89.7%), training/worker guidance (89.7%), and manufacturing (81.1%).
• Sales and marketing/external communication is the most common area of AR/MR usage for businesses. 56.6% of enterprise users say they use AR/MR for sales and marketing/external communication.

 

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Key Brands

• According to IBIS, Oculus VR, Unreal Engine, Facebook Spaces, and Contentful are key brands in the US virtual reality software market based on market share.
• According to Observer Analytics, Oculus, HTC, and Microsoft are the leading players in the VR headset market. Nvidia holds the largest share in the consumer VR graphics card market (90%), Intel leads the VR processor market (85%), and AMD is a runner-up in both of these markets with a market share of 8% and 15% respectively.
•  Facebook, Microsoft, Apple, Google, and Amazon are some of the key US companies that lead the augmented reality market.

IV — EMEA Immersive & Virtual Reality/Experiences Market

European Market

• The European AR and VR market was sized at $4.57 billion in 2018 and $8.03 billion in 2020. This market is expected to grow at a CAGR of 37.5% from 2020 to 2027 to reach $74.62 billion in 2027.
• Another report from GMD Research indicates that the extended reality (XR) market in Europe was sized at $7.59 billion in 2019. This market is expected to grow at an annual rate of 47% from 2020 to 2026 to reach $104.3 billion by 2026.
• In terms of spending, Europe accounted for nearly 15% of the global spend on AR/VR with estimated spending of $1.6 billion in 2020.

UK Market

• According to PwC, AR and VR are expected to contribute £62.5 billion to the UK economy by 2030. In addition, these immersive technologies are estimated to provide a 2.4% boost to GDP by 2030.
• PwC further estimates that AR will contribute £44.4 billion and VR will add £18.1 billion to the UK economy during the forecast period.
• These technologies will also shape the UK workplace with 1.19% of jobs or 400,663 people using AR/VR by 2030.

EMEA Current Consumer Usage

• According to Futurum Research, 45% of households in EMEA have at least one AR/VR device. 14% of households have four or more wearables.
• In 2019, 17% of EMEA consumers said they will experience a remote destination or event using AR or VR. Notably, a vast majority (65%) of these consumers are aged 21 to 34 years.

EMEA Predicted Consumer Usage

•  61% and 79% of EMEA consumers say they would "use AR or VR as part of their consumption (engagement) experience" by 2025 and 2030, respectively.
•  53% of consumers in the EMEA expect to "use an AR, VR, or MR app to see how a product looks without the product being physically present (for example, how a piece of clothing might look on them or how a piece of furniture might look in their home)."
• In addition, 58% of EMEA consumers expect to "visit or tour a remote destination or event (vacation, concert, performance, interesting site or similar) using AR, VR, or MR technology" by 2025.

EMEA XR Usage by Brands & Businesses

•  55% of brands in the EMEA region say they are investing in AR or VR as a marketing asset. 52% are investing in these technologies as a customer support asset.
• A majority (65%) of VR/AR companies in the UK produce AR/VR content, 25% focus on developing the "technology that enables further VR experiences to be built and enhanced. The remaining 10% are operating in the service sector, for example building a dedicated VR cinema or providing VR/AR marketing services."

EMEA Consumer Behavior

•  41% of people in the UAE and Saudi Arabia define "luxury as an enriching experience".
• More than half (53%) of consumers in the EMEA agree with the statement "facial recognition creeps me out". This shows that brands should be mindful of consumer privacy concerns regarding immersive tech.

Key Brands

• According to GMD Research, DAQR, EON. Reality Inc., Facebook, Google, HTC, Microsoft, Samsung, Seiko Epson, Sony, and Vuzix Corporation are key players in the AR and VR market in Europe.

• Another report from GMD Research on the extended reality (XR) market indicates that Acer, Augmedix, Aurasma, Blippar.com, Catchoom, Dell Technologies Inc., HP Development Company, Koninklijke Philips, MAGIC LEAP., Medical Realities, Metaio, Niantic, Inc., Nintendo Co., Psious, Total Immersion, Wikitude GMBH, and Zappar are key players in the XR market in Europe.

V — Global Immersive & Virtual Reality/Experience Trends

AR/VR for Training

• AR and VR technologies have valuable contributions to both educational and on-job training programs. These technologies allow students and budding professionals to train in a simulated environment with a "significant degree of accuracy while avoiding the risks associated with making a mistake."
• This was identified as a trend based on repeated mentions in several industry resources including MobiDev Corporation, Reydar, ARPost, AiHubspot, and others.
• People studying construction, mining, or any complex or hazardous areas can virtually train without any risks. In the healthcare sector, medical students can use AR/VR training programs and practice surgical techniques, refer to images from MRI or CT scans, and observe a patient’s vitals. A study from Yale University reported that "VR learners performed surgeries 29% faster and with 6-times less mistakes than the traditional learning group."
• Enterprises can use gamification to onboard or train employees or prepare them to handle real-life situations and emergencies. Airports use these technologies for airport safety training e.g., The International Air Transport Association uses a VR platform to train its employees in on-ground operations.
• Research studies indicate that VR/AR learners had a "recall rate of 80% even after 1-year of training. Traditional learning, on the other hand, has a recall rate of only 20% after 1-week."
• Walmart uses Oculus VR headsets to train its employees in handling customers. The company has also used VR to train employees in dealing with customers on Black Friday sales.

AR/VR-Assisted Shopping

• The use of AR and VR to provide a virtual shopping option to customers has become an important trend for major players in the retail industry. This trend was identified based on repeated mentions in several industry resources including MobiDev Corporation, ARPost, and AiHubspot.
• Augmented shopping allows customers to virtually interact with and personalize products. The most common augmented shopping experiences offered by brands are "Try On" for worn products, "Try Out" for products that can be placed in a virtual environment, and "Interact" for interactive products.
• Retail companies and brands are also offering virtual fitting rooms that enable customers to experience a try-before-you-buy experience from their homes. In the 2020 IBM US Retail Index report, 18% of respondents said they have already tried a virtual fitting room while 41% said they were interested in this technology.
• Brands are also using wearable AR devices to "send notifications and deliver a customized shopping experience based on consumer preferences."
• Several companies including American Apparel, Sephora, Uniqlo, Lacoste, and Kohls are participating in this trend. IKEA offers an app that uses AR and enables customers to visualize how furniture and decor products will look like in their home.
• Between 2016 and 2018, Sephora's Virtual Artist app saw "200 million shades tried on during the more than 8.5 million visits to the AR feature."

AR/VR for Consumer Entertainment

• The use of AR and VR for consumer entertainment is identified as a trend based on repeated mentions in several industry resources including MobiDev Corporation, Reydar, ARPost, and AiHubspot.
• The trending applications of AR and VR in the entertainment sector range from immersive or interactive theater performances to VR amusement rides and most recently, live sports events.
• AR enhances both in-person and virtual events through WebAR solutions or dedicated AR event apps. VR allows broadcasting live sports events in a "360-degree format providing [an] immersive experience to sports fans all over the world."
• Amusement and Theme Parks are "either incorporating a VR component into existing rides and roller coasters or adding new VR rides to their parks." Some examples include the Demonen ride in Tivoli Gardens in Copenhagen, Denmark and Galactica at Alton Towers in Alton, UK.
• OZ Sports, a sports technology company, has collaborated with visual content studio RVX Productions to "launch a new product designed to enhance broadcasts of sports events played out in empty stadiums during the Covid-19 pandemic. OZ Arena is targeted at football and allows spectators to be dynamically added to live broadcasts with AR. Virtual fans can personalize their experience with their own avatars, club shirts, genuine cheers from home via an app, and even appear in their preferred seat. Fans can also participate in a game through audio-only or with immersive visual participation in a live broadcast."

VI — US Immersive & Virtual Reality/Experience Trends

Distance/Remote Learning

• Lockdowns and social distancing restrictions imposed due to the COVID-19 pandemic have transformed the education industry. Remote learning has become the new norm and educational leaders have started investing in AR and VR technologies. Spending on VR in education is expected to reach $640 billion by 2023.
• ABI Research states that AR and VR shift "the learning process from passive to active, allowing students to interact with content and practice their knowledge in real-time conditions. Learning by experience leads to better understanding, enhances knowledge recall, and strengthens retention. Immersive and interactive experiences stimulate students' motivation and increase their engagement level, which are fundamental factors for achieving learning goals."
• Augmented reality diversifies learning modes at home by offering more visual content. It can replace monotonous video conferencing and recorded lectures with multidimensional images and models, animations, creative presentations, simulations of chemical reactions, biological processes, physical procedures, and 3D renderings to improve student engagement. Students can experience virtual educational tours, field trips, explore planets, and investigate volcanic eruptions. The technology also allows students to inspect a model from multiple angles by moving and interacting with a virtual object.
• The use of AR and VR in remote and distance learning is especially useful in increasing engagement among Generation Z students who "expect technology to be integrated into how they learn, collaborate and share knowledge."
• This was identified as a trend based on a 2021 report by Insider Intelligence and repeated mentions in several other industry resources including MobiDev Corporation, Market Scale, and software boutique OrangeLoops. This trend is also applicable to the global market.
• MindLabs is using AR technology in its STEM learning app, The MindLabs: Energy and Circuits. The app teaches kids about electricity and circuits and allows them to build circuits with little to no supervision.

Virtual Reality Fitness

• VR fitness games and exercise experiences allow users to create a new workout environment around them.
• These games use immersive technology i.e., a VR headset that takes users in a virtual environment where they can connect with other people and/or engage in workouts, boxing, bowling, and cognitive challenges. These workouts help cure the boredom and burnout from traditional workouts.

• This was identified as a trend based on a 2021 report by Insider Intelligence and repeated mentions in several other reputed industry sources including eMarketer, Verywell Fit, and U.S. News.
• In April 2020, Within, a company that specializes in innovative immersive experiences in AR and VR launched the world's first subscription-based VR fitness service called Supernatural.
• Supernatural is designed for the Oculus Quest VR headset. It provides daily workouts, expert coaching, detailed fitness tracking, premium music, and virtual access to some of the world's most beautiful locations.
•  FitXR is another virtual fitness app designed for Oculus Quest. The app's sales increased 535% YOY in the fourth quarter of 2020.
•  VR gyms are another option for people who don't own a VR system. One such VR gym Black Box was opened in 2019 in San Francisco. Users can visit these gyms for an immersive fitness experience.

VII — EMEA Immersive & Virtual Reality/Experience Trends

VR Collaboration

• Opportunities for collaboration increase as VR becomes more user-friendly and easier to integrate into a company's workflow, "reducing travel so organizations can lower their carbon footprints and costs, connecting more organizations together and enabling more users to have a dynamic experience within their virtual datasets."
• "Large immersive displays such as CAVE’s (Cave Automatic Virtual Environment)" have also increased VR collaboration as they aim to reduce the limitations of head-mounted displays (HMDs).
• CAVE is a "virtual reality environment consisting of a cube-shaped VR room in which the walls, floors and ceilings are projection screens. The user typically wears a VR headset or head-up display (HUD) and interacts through input devices such as wands, joysticks or data gloves."
• CAVE allows multiple users to share a combined VR experience. It also enables users to collectively examine and interact with complex 3D models.
• This is identified as a trend by ST Engineering Antycip, "Europe’s leading provider of simulation software, projection and display systems, and VR systems for training and aiding with safety." It was also observed at the Laval Virtual, Europe's premium event focused on VR and AR.
• The Belgium-based company, Barco, offers a range of VR solutions for group collaboration. These include Caves, Powerwalls, and Canvas.

VR For Automotive Industry

• VR allows automotive manufacturers to visualize CAD designs into virtual cars.
• Automotive engineers and designers can then sit inside and walk around these virtual cars. They can get a "better handle on 3D designs, thanks to VR enabling software which can display 3D models on any VR display solution without limitation to resolution, size, shape or performance." This allows them to inspect little details and identify any potential design flaws.
• Apart from vehicle design, other trending applications of VR are in self-driving cars. "VR and AI not only help through testing the reliability and the safety of the autonomous cars, but also to simulate any VR environment. By reconstructing any scenarios, any situation, Virtual Reality will be a great help, for instance in case of an accident, for insurance companies and law enforcement agencies."
• Companies are also using AR for automotive marketing. German automotive giant BMW has designed an AR app in collaboration with Accenture that allows customers to "experience a new car in their driveway without having to go to the dealership. They can also see what the virtual car looks like in different colors."
• Identified as a trend by ST Engineering Antycip in Europe, this trend is also applicable to the global VR/AR market.

VIII — Gen Z and Immersive & Virtual Reality/Experiences

XR & Gen Z

• Compared to the other generations, Gen Z has a deep understanding of XR technologies and their issues. According to Samantha Wolfe, Adjunct Professor at NYU Steinhardt and founder of PitchFWD, "VR, AR, AI, ML, and Gen-Z are all maturing together. Therefore, Gen-Z is the most likely generation to integrate advanced technologies like virtual reality and augmented reality seamlessly into their daily lives."
• She further adds, "Gen-Z will enter the workforce understanding digital worlds and technologies and how to regulate their own time in and out of XR. This generation soon will be able to afford the next version of Apple’s augmented reality glasses (whenever the first are released) and the 3rd and 4th generations of the Oculus. It’s not just going to be Gen ‘Z,’ it’s XRZ —a Cross-Realities Generation."
• In a 2019 study by Deloitte, 33% of Gen Z respondents said 5G will help them consume new forms of entertainment services such as VR and AR.

 

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VR Consumption & Perception

• A June 2020 study conducted by Ipsos and the Global Myopia Awareness Coalition (GMAC) revealed that 15% of children and teens in the US "spent more time with VR headsets since the pandemic began. In general, people who owned VR headsets used them more; others explored non-headset options or considered buying headsets."
• In a 2019 survey, 77% of Gen Z respondents believed VR adoption will increase in the next five years.
• Cognizant reports that 60% of Gen Z respondents are likely to use VR and 22% are neutral about it.

VR Use Cases

• In a study conducted by Cognizant, 52% of Gen Z respondents said they are likely to use VR to watch videos and play online games.
• Another "43% said they would use VR for movies, while 36% said they expect to use the new technology for live events, such as concerts and award shows."
•  80% of users who "create personalized characters and pay for virtual tokens" on the South Korean avatar app Zepeto are 6-24-year-old.

AR Consumption & Perception

• A 2019 study on the 'global consumer appetite for AR-assisted shopping experiences' reports that 21% of Generation Z respondents experienced AR-assisted shopping in the last 12 months.
• Of those who haven't used this technology whilst shopping, 47% said they would like to try AR-assisted shopping if given the opportunity.

 

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• According to a 2019 study by JWT Intelligence and Snap Inc., more than half (56%) of Generation Z consumers say they use social apps to express their creativity. 40% say they use AR filters and lenses on social apps to enhance photos and videos.

 

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• A 2020 study by the National Research Group (NRG) found that 51% of Gen Z respondents consider AR content 'very important' for entertainment and social connections.

 

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Format of Immersive Experiences

• Gen Z consumers "are drawn to premium, immersive and made-for-mobile experiences: content that communicates compelling stories in less time, and is shot in vertical display."
•  74% of Gen Z (and Millennial) consumers say videos feel more immersive when they fill the screen vertically.
• Gen Z consumers want an immersive experience that is convenient and fits well into their schedule. 82% of Gen Z (and Millennial) consumers prefer short-form premium content and 70% say they would rather "engage with a lot of shorter videos than get completely immersed in a longer video."

IX — Case Studies on Immersive & Virtual Reality/Experiences

Virgin Holidays Used AR to Drive Customer Engagement

• Virgin Holidays partnered with Movable Ink in order to create an email-based AR experience that will allow customers to "envision themselves in the background of their upcoming destination or an exotic locale." The goal of creating this experience was to drive Virgin Holidays' customer engagement in between their planned travels and boost social sharing.
• The company created two email campaigns using the augmented reality functionality of Movable Ink. The first AR email campaign, "Future Forecast," focused on customers with a planned upcoming stay. The email allowed customers to directly launch the AR experience without downloading any app. Customers were then able to "overlay themselves on the background of their upcoming destination and take a picture with their phone or computer" to share it via email and social platforms.
• The second AR email campaign, "Wish You Were Here," was sent to customers who had no bookings for a future vacation. The campaign allowed them to take "caricature-like photos, switching between five different destinations in the US: New York City’s Statue of Liberty, Hollywood, Las Vegas, Florida, and a scuba diving destination." Customers were able to share images from the email on social media sites. This social sharing further "served as entertainment and brand exposure for customers who were 'between holidays.'"

 

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• Both campaigns showed outstanding results. The "Future Forecast" AR email campaign generated:
•  81% unique open-rate 
•  25% unique click-through-rate (CTR)
•  8% uplift in organic reach compared to the company's typical ‘Ready To Travel Program’ emails
•  25% increase in CTRs compared to the typical ‘Ready To Travel Program’ emails
•  Nearly two-thirds of recipients took a selfie
•  44% of recipients engaged with the experience for at least 1 minute

• The "Wish You Were Here" AR email campaign resulted in a 40% increase in unique open-rates and a 75% increase in click-through rates. In addition, half of the recipients spent more than 1 minute engaging with the experience.
• 50% of recipients that engaged with this AR experience took a selfie and 45% shared their selfies on social media.

Wendy's: Keeping Fortnite Fresh by VMLY&R

• In January 2020, Wendy's created an innovative ad experience to target and interact with the 12-to-24-year-old gaming community of Fortnite on the online streaming platform Twitch. Instead of creating a VR experience that requires VR headsets or an advertisement that interrupts entertainment, Wendy's marketed itself within the virtual world by playing Fortnite on Twitch.
• Wendy's went through Fortnite’s online storyline and found that players were "prompted to hunt cattle and transport beef to freezers at nearby restaurants" to earn coins. Wendy's team used this part of the storyline to create an experience that would remind Twitch audiences of its famous "fresh, never frozen beef" slogan.
• The company, along with its marketing agency, VMLY&R, created an online avatar that looked like Wendy and launched a Twitch stream where Wendy's avatar broke into restaurants to destroy freezers.
• The campaign enabled "Wendy's fans to interact with her avatar and the stream," which encouraged other Fortnite players to participate in this experience and smash freezers. Tweets and social sharing of Wendy's Twitch stream further increased engagement.
• Social media mentions of the company increased by 119% during the stream. The stream was viewed more than a quarter of a million times for a total of 1.52 million minutes.
• Wendy's marketing agency VMLY&R won multiple awards for this campaign including a "Silver in the AR/VR/Digital category, Silver in the Engaged Community category, and Bronze in the Media Innovation category."

Research Strategy