Industry Analysis
Extended Reality (XR)
Refers to the spectrum of experiences that blurs the line between the real world and simulated world. The technology immerses the user through visuals, audio, and potentially olfactory and haptic cues. The two major types of XR are VR and AR.
Virtual Reality (VR)
Visually takes the user out of real-life view and into a virtual environment, whereby the user(s) typically harness a headset for viewing coupled with some form of hand-held controller(s) to navigate around the virtual space
Augmented Reality (AR)
Overlays digital objects—such as information, graphics, sounds—on the real world, allowing the user(s) to experience the relationship between digital and physical worlds.
Credit: Accenture Insights[1]
Extended Reality (XR)XR refers to the spectrum of experiences that blurs the line between the real world and the simulated world. The technology immerses the user through some combination of visual, auditory and haptic cues. The two major types of XR are virtual reality and augmented reality.
The advent of extended reality is revamping the way people experience the physical and the virtual environments, from observation to immersion. XR is an umbrella term that encompasses both augmented reality and virtual reality, thereby covering a full spectrum of real and virtual environments. XR experience caters to business issues and creates innovative solutions to add efficiency and increase productivity to meet critical client needs. The implementation of XR provides enterprises with a platform that enables users to perform their jobs in a much more effective and efficient manner.[2][3][4]
Virtual Reality (VR) visually takes the user out of their real-world environment and into a virtual environment, typically using a headset for viewing coupled with hand-held controllers to navigate the virtual space.
Augmented Reality (AR) overlays digital objects (information, graphics, sounds) on the real world, allowing the user to experience the relationship between digital and physical worlds, as one.
By solution:
Consumer Engagement
Business Engagement
By application:
Virtual reality (VR)
Mixed reality (MR)
Augmented reality (AR)
By industry (of end users):
Education
Retail
Industrial & Manufacturing
Healthcare
Media & Entertainment
Other End-user Industries
Geography:
North America
Europe
Asia Pacific
Rest of world
The convergence of the smartphone, mobile VR headset, and AR glasses into a single XR wearable could replace all the other screens, ranging from smartphones to smart TV screens. Mobile XR has the potential to become one of the world’s most ubiquitous and disruptive computing platforms.
Market segmentation
The extended reality market is segmented by component, type, end user, and delivery model.
Component-based segments are solutions, hardware, and services. The hardware segment comprises cameras, sensors, speakers, and transducers. The growing inclination of people towards automation is promoting the use of sensors across different verticals. This is likely to propel the global extended reality market due to increase in the adoption of VR and AR technology. The service segment comprises professional services and managed services. By type, the market is sectioned into PC-tethered XR and mobile XR. The better convenience offered by mobile XR is likely to augment the extended reality market. By delivery model, the market is segmented into business-based and consumer-based. By end-user, the market is categorized by manufacturing and industrial, healthcare, media and entertainment, transportation, retail and e-commerce, and others. The entertainment sector is expected to generate numerous growth scope for the extended reality market, followed by the retail and manufacturing segments.
Market Growth Forecast
The demand for immersive technology is driven through the rising application of AI and IoT, both of which are delivered via the Cloud and integrated into applicable systems. Companies are already designing transformative XR experiences that capitalize on the potential of the human experience revolution using AI and the Internet of Things (IoT/IoE).
The Extended Reality (XR) Market is expected to register a healthy CAGR of over 65% during the forecast period (2020 - 2025). The integration of XR across the business ecosystem will result from wide applicability across multiple enterprise verticals, with a form factor that supports all-day use and a clear ROI by the help of its manufacturing efficiencies that is currently being driven by the organizational inertia, enterprise risk aversion, and sales cycles.
The growing popularity of extended reality (XR) comprising of virtual reality (VR), augmented reality (AR), and mixed reality (MR) technologies is expected to propel its market growth in the years to come. Extended reality technology offers highly digital experiences that is likely to escalate the extended reality market growth. The application of sophisticated photorealistic visuals coupled with on-device processing, edge cloud processing technologies, and 5G are expected to bolster the extended reality market. In addition, the combination of VR and AR technologies enables end-users to experience a high digitalized content via standalone headsets. It is observed that XR technology is significantly redefining heavy standalone headsets to smart glasses that can provide real-time schematics, information, and related visuals. These factors are expected to boost the global extended reality market growth. On the downside, lack of proper infrastructure, trained personnel, and issues regarding immersive 3D graphics can impede the extended reality market growth.[5]
Regional Analysis
The rapid expansion of the extended reality market in North America can be attributed to the technological advancements, such as virtual reality (VR) and augment reality (AR), and increase in their adoption across different verticals. The presence of well-established companies and their deliberate efforts in diversifying their product portfolio, triggering investments by tech giants, are expected to impel the extended reality market in the North America region.
In Asia Pacific, the extended reality (XR) market is anticipated to expand at a high pace in the review period. The growing demand for extended reality in training is likely to boost the APAC market growth. In addition, the rise in AR and VR applications in the media and entertainment sector can gain considerable traction for the regional market.
North America to Remain the Largest Market Over the Forecast Period[6]
North America is one of the prominent regions for the extended reality market. It has also been a pioneer in the adoption of innovations, which provides North America with an edge over the other regions.
Educational institutions across the United States Department of Education is using a virtual platform to help students with autism and learning disabilities in schools, across the country. In 2018, the Office of Special Education and Programs announced an investment of USD 2.5 million towards a new program that will use XR to nurture social skills in students with disabilities.
With the ongoing digital transformation across various industries and verticals, there is a rising demand for reliable smart sensors that require little maintenance and have relatively low repair costs. These sensors drive operational efficiencies across business processes. For instance, in the healthcare industry, researchers are designing tiny optical and biopotential sensors that can be fitted into wearable devices. These sensors further allow doctors to diagnose a patient’s health in real-time. Moreover. miniaturization of sensors is increasing the installation of sensors in all possible business assets to enable effective monitoring and analysis. Additionally, a significant focus on R&D pertaining to sensor technology is expected to aid the growth of the global extended reality market during the forecast period. Thus, rapid developments in sensor technology will drive the growth of the global extended reality market during the forecast period.
It’s clear that AR benefits modern businesses in many different ways, variable by industry.
Retail
In retail, companies typically benefit from:
Highly customizable content that better matches the customers’ needs.
The ability to promote printed content, including virtual magazines and even limited time coupons.
Removing language barriers via automated, AR-powered translation services.
Real estate
In real estate, agents can use AR to maximize their profitability[7] by:
Hosting virtualized or augmented tours.
Letting customers redecorate or renovate buildings in a virtualized space.
Hospitality
The hospitality industry also enjoys numerous benefits from AR[8], including:
Showcasing guestrooms, suites, and amenities through an interactive, virtual tour.
Directing customer traffic to streamline and optimize the check-in process.
Although the bulk of AR is seen in the retail and entertainment industries, its influence is starting to spread into other areas. Businesses in manufacturing, warehousing, and other industrial sectors also benefit from AR in various ways, including:
Improving operations by providing visual, step-by-step instructions on common processes.
Diagnosing and simplifying maintenance by analyzing parts and highlighting bottlenecks.
Testing out virtual prototypes that are fully modifiable in real-time.
Projecting product images on warehouse shelves to aid in stocking and inventory management.[9]
Many of AR’s strengths focus on improving customer engagement and expanding the overall customer experience. With a renewed emphasis on guest services and customer satisfaction in 2019 and beyond, customers are likely to see a greater benefit from the integration of AR than companies’ workforce.
Increasing Adoption in the Military[10]
As per Technavio, the increasing adoption in the military will have a positive impact on the market and contribute to its growth significantly over the forecast period. This research report also analyzes other significant trends and market drivers that will influence market growth over 2020-2024.
The rising adoption of extended reality in the military sector is one of the key extended reality market trends expected to boost market growth during the forecast period. Extended reality is applicable in the military sector as it offers solutions such as tactical augmented reality (TAR). TAR resemble night-vision goggles and are often used for tracking the location of soldiers and allied and enemy forces. In addition, virtual training minimizes the risks associated with real-time training, particularly where personnel and equipment or devices are involved. Therefore, defense agencies are increasingly shifting their focus to simulation and synthetic training methodology. Furthermore, the increased budget for defense and law enforcement over the last few years has also boosted the demand for innovative simulation training systems among military and police. These military simulations and virtual training systems are well supported by an architecture based on commercial-off-the-shelf (COTS) components, which use the plug and play capability. All these factors are expected to drive market growth during the forecast period.
In the military and defense sector, the US Military is looking at immersive technologies for training purposes. The United States will also be investing as much as USD 11 billion by 2022 into virtual, augmented and mixed reality training systems, with extended reality becoming a primary focus of military innovation.
Customer Benefits of XR
The majority of today’s AR applications center on improving the customer experience in one way or another – and sometimes in ways that we never thought possible. Pokémon Go, for example, is a popular video game and one of the earliest examples of AR in the 21st century. It also demonstrated the level of innovation and ingenuity that is only possible through mediums like AR.
Although it was primarily geared for younger gamers, Pokémon Go pushed consumer interest in AR by leaps and bounds. It also drove AR software developers to push for bigger and better things with their own releases. The result is a flood of AR and VR solutions that help customers meet all their needs.[11]
AR can and already has vastly improved business functions to date. It goes without saying that AR will continue to bring a lot of benefits and change the world.
It is without question that augmented reality has seen great development in the past few years. A recent Juniper report suggests that the business world is looking to invest about $2.4 billion into the industry, showing that augmented reality will slowly be integrated further into our society, and there is good reason for it.[12] Augmented reality can bring a lot of benefits to industries around the world. Here are the advantages of augmented reality:[13]
1. Object Visualization
In its core, augmented reality integrates the digital world with the physical. In this alone, many industries have already been reaping this advantage. In commerce, especially fashion and clothing, companies now have the technology to vastly improve their customer experience, whether it may be online or offline. For example, IKEA was able to implement a great AR strategy that allowed consumers to place home furniture and other products in their own home. This app gave consumers better insight on whether or not the products fit in their homes and revolutionized the consumer experience.
2. Training and Education
AR technology’s digital and real-world integration can strongly benefit training and education and hold limitless possibilities. With the headsets being able to recognize environments and objects, businesses can leverage real time information to help their employees with training. For example, ISS has used AR technology to teach their astronauts how to maintain and repair space stations. By leveraging Microsoft’s HoloLens, these space men can train to experience what it could be like working in space. This technology can also help on job as information is streamed onto their glasses, they would have more mobility to work with what’s on hand.
This technology can also teach companies a lot of things as well. Imagine combining machine learning with AR headsets. Workers can wear these headsets on the job and the machine learning aspect can show businesses where they can improve the process down the line.
3. Productivity
Augmented reality can definitely help businesses improve their workflow and processes, especially in factories. With AR, managers can potentially see the progress of projects, which can greatly help streamline the process. Workers can also benefit from this technology as well. With headsets on, workers can be warned of potential dangers as well as have pieces of equipment and resources identified quicker.
4. Customer Service
Augmented reality technology can greatly improve customer service as it can help improve the customer experience. In health care, doctors and healthcare practitioners can use AR headsets to diagnose and pull customer information to vastly improve the visit.
But customer needs vary from industry to industry, company to company, and even between individual consumers. Understanding these specific needs and catering to them as much as possible is the key to success.
Nonetheless, there are some fundamental advantages of AR that apply in nearly every case, including:
Customer service that is quicker and more efficient than ever before.
The ability to view products – including various color options – before committing to a purchase.
Easy access to customer reviews and comprehensive product information.
Other benefits of AR are applicable to one specific industry or another.
Visual guides to help customers locate products quicker.
Tie-ins with in-store promotions and discounts, including printed coupons.
Video games that can reward users.
Hands-on, interactive training sessions for employees or end-users.[14][15]
There are several additional benefits, too, many of which apply specifically to your customer base. For best results, couple your AR with big data to target certain demographics and track your results. Not only does this let you gauge your success and determine the value that augmented reality adds to your company, but it lets you know how you’re faring against other businesses in the 21st century – including your biggest competitors.[16]
[1] https://www.accenture.com/hu-en/insight-xr-extended-reality
[2] https://www.mordorintelligence.com/industry-reports/extended-reality-xr-market
[3] https://www.accenture.com/hu-en/insight-xr-extended-reality
[4] https://www.marketwatch.com/press-release/extended-reality-xr-market-key-facts-and-forecast-predictions-presented-until-2026-2020-05-04?mod=mw_quote_news
[5] https://www.marketwatch.com/press-release/extended-reality-xr-market-key-facts-and-forecast-predictions-presented-until-2026-2020-05-04?mod=mw_quote_news
[6] https://www.businesswire.com/news/home/20200401005285/en/Extended-Reality-Market-2020-2024-Rapid-Improvements-Sensor
[7] https://www.forbes.com/sites/forbesrealestatecouncil/2017/07/14/eight-ways-virtual-and-augmented-reality-are-changing-the-real-estate-industry/#3f1fed6a65a3
[8] https://www.forbes.com/sites/forbestechcouncil/2018/06/28/new-technologies-will-revolutionize-the-hospitality-industry/#1721bb4373c3
[9] https://www.information-age.com/augmented-reality-industry-benefits-challenges-123466440/
[10] https://www.businesswire.com/news/home/20200401005285/en/Extended-Reality-Market-2020-2024-Rapid-Improvements-Sensor
[11] https://www.businessnewsdaily.com/9245-augmented-reality-for-business.html
[12] https://www.digi-capital.com/news/2015/04/augmentedvirtual-reality-to-hit-150-billion-disrupting-mobile-by-2020/
[13] https://www.information-age.com/augmented-reality-industry-benefits-challenges-123466440/
[14] https://www.techfunnel.com/information-technology/5-benefits-augmented-reality-brand/
[15] https://thinkmobiles.com/blog/augmented-reality-retail/
[16] https://augray.com/blog/augmented-reality-for-business/