Extended Reality Is on the Path to Growth

  • Strong interest in extended reality by businesses and solid sales of Oculus Quest 2 to consumers lift adoption of extended reality devices in 2021.
  • CCS Insight forecasts that 70 million virtual and augmented reality devices will be sold in 2025, with a market value of $21 billion.
  • Future growth remains dependent on smart glasses replicating the success of smart devices such as smartwatches and home speakers in the next few years.

London, 22 June 2021: Strong demand for Facebook’s Oculus Quest 2 headset and keen interest by enterprises in extended reality technology are fuelling market growth. Sales are set to rise 45% to 10.7 million units in 2021, according to the latest forecast by technology market analyst firm CCS Insight. It expects sales of virtual and augmented reality (VR and AR) devices to continue to grow strongly over the next five years, reaching 70 million units in 2025, at the manufacturer value of $21 billion.

“The market for VR and AR devices is growing, not despite the pandemic but thanks to it”, comments Marina Koytcheva, Vice President of Forecasting at CCS Insight. “Economic uncertainty is persistently high, but we have identified good levels of interest in this technology at a time when physical distancing has become the norm. It allows people to keep themselves entertained and businesses to continue serving their customers amid operational challenges”.

Facebook’s success with the Oculus Quest 2 is undoubtedly the main driver of higher adoption of VR in 2021. “The Quest 2 has hit a sweet spot where an excellent experience meets an attractive price”, explains Leo Gebbie, Senior Analyst for Extended Reality at CCS Insight. “Its all-in-one design means that no other devices are needed, and above all, the headset is affordable enough to attract new customers to the technology, including both gaming enthusiasts and more-casual users. Facebook’s extensive advertising reach and deep pockets help as well, warding off rivals that can’t afford to sell their products at the same price”.

The enterprise market also remains hot. “Many more companies are looking at extended reality as part of their speedy digital transformation, in the wake of the pandemic,” according to Angela Ashenden, Principal Analyst for Workplace Transformation at CCS Insight. Companies that started using extended reality for tasks like remote assistance are increasingly looking to expand its use to other applications and business operations, such as product development and training.

Sales of extended reality headsets to enterprises tripled in 2020 and are on track to grow by another 74% to 1.4 million units in 2021, before doubling again in 2022 when economic conditions improve further. Enterprises are expected to grab more than 30 million extended reality headsets cumulatively in the period from 2021 to 2025.

Although growth is already happening, another, still nascent, segment is expected to contribute in the future. “We expect new and exciting products like AR smart glasses to capture the imagination of consumers over the coming years”, comments Gebbie. “We predict that by 2023, major consumer brands including Samsung, Facebook and Apple will stake claims on this emerging opportunity”.

CCS Insight expects to see 15 million such devices sold in 2025, ramping up much as other technologies did: smartwatches went from less than a million units to more than 25 million within three years, showing that consumers worldwide are open to embracing new technology that offers something new and exciting.

A summary of CCS Insight’s new forecast is presented in the chart below.

More details of CCS Insight’s extensive VR and AR research service can be found at www.ccsinsight.com/research-areas/virtual-and-augmented-reality

Notes to editors

CCS Insight is a leading provider of research on the extended reality market. Its VR and AR device forecast covers several product segments and presents three scenarios (core, low and high) that plot the effects of different market developments.

This forecast is part of a broader suite of research into extended reality technology, including an extensive database of devices in this area, regular reports and updates on the latest announcements, events and news.

About CCS Insight

CCS Insight is a global analyst company focussing on current and future trends in technology. It provides comprehensive services that are tailored to meet the needs of individual clients, helping them make sense of the connected world. Follow @CCSInsight on Twitter or learn more at www.ccsinsight.com.

For further information contact:
Sophie Adams
Harvard PR
Tel: + 44 (0) 738 502 3639
E-mail: ccsinsight@harvard.co.uk

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