New Study Projects Headworn AR Revenue to Reach $17.7 Billion by 2025

VRARA members can access this report through a discounted subscription to ARtillery Pro.

ARtillery Intelligence has released a new report that projects headworn AR revenue to grow from $1.6 billion in 2020 to $17.7 billion in 2025, a 61.8 percent compound annual growth rate. Entitled Headworn AR Global Revenue Forecast, 2020-2025, the report examines glasses-based AR revenue totals and subsegments – including consumer and enterprise spending.

Enterprise spending holds a commanding revenue share today, eclipsing consumer spending by 100 to 1. This is driven by productivity gains in industrial settings, where AR’s line-of-sight guidance boosts speed and error reduction. Consumer AR meanwhile trails in revenue, as the technology isn’t yet stylistically viable for consumer markets. But spending shares will shift over time as consumer AR adoption gains ground in later years – partly accelerated by Apple’s projected market entrance.

“Apple's projected smart glasses could have a classic Apple 'halo effect' by boosting consumer awareness and demand for the emerging hardware category,” said ARtillery Intelligence Chief Analyst Mike Boland. “Moreover, its V1 design target will be style and wearability versus graphical immersiveness; and its appeal will lie in elegant integration with other Apple hardware and wearables. Think of it like the iPhone 1 – evolving over several years.”

In addition to Apple, Microsoft has already begun to accelerate the headworn AR market. Its $22 billion 10-year contract with the U.S. Army to supply battle-grade hololens units caused an inflection in 2021, and elevated revenues throughout this forecast period.

As is the case across the global economy, AR glasses revenues have been impacted in the COVID era. Given that the consumer AR glasses market is relatively small to begin with, its revenue has been minimally affected. Enterprise markets have conversely suffered to some degree due to recessionary spending and supply-chain impediments. However, enterprise AR use cases support COVID-era demand signals, thus offsetting declines.

“Certain flavors of enterprise AR like virtual assistance and guided maintenance align with remote work in some corporate and industrial settings,” said Boland. “This could mean that COVID-pressured adoption in some fields engenders new enterprise habits that sustain into a post-COVID era of hybrid remote work.”

Report Availability

Headworn AR Global Revenue Forecast, 2020-2025 is available to ARtillery PRO subscribers, and more can be previewed here. VRARA members can access this report through a discounted subscription to ARtillery Pro.

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market-sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. Learn more here.

New Study Projects Mobile AR Revenue to Reach $26.05 Billion by 2025 - get the report here!

VRARA members can access this report through a discounted subscription to ARtillery Pro.

ARtillery Intelligence has released a new report that projects mobile AR annual revenue to grow from $6.87 billion in 2020 to $26.05 billion in 2025, a 30.5 percent compound annual growth rate. Entitled Mobile AR Global Revenue Forecast, 2020-2025, it dives deep on mobile AR revenue totals and subcategories – including consumer and enterprise spending.

Enterprise productivity is the leading revenue category in 2021 ($3.12 billion), followed by AR ad placement ($1.98 billion) and consumer in-app purchases ($1.89 billion). The latter comes mostly from player spending in Pokémon Go. Ad placement will be the leading mobile AR revenue category by 2025 ($6.68 billion) as brands continue to recognize AR’s ability to demonstrate products in visually immersive and conversion-boosting ways. AR commerce-enablement software will be driven by similar factors.

“Several of these mobile AR revenue categories represent what we call AR as a Service, which are SaaS-like AR offerings that enable companies to build AR experiences,” said ARtillery Intelligence Chief Analyst, Mike Boland. “Those experiences can be visually-guided productivity in enterprise settings, or consumer-facing experiences — an area we call B2B2C. In either case, these AR ‘picks & shovels’ will represent a large opportunity to meet demand for democratized experience creation and accelerate time-to-market.”

As is the case across the global economy, mobile AR sub-sectors have been impacted unevenly by the COVID-19 global pandemic. Given that software and digital products fared well in global lockdowns, the impact on mobile AR has been mostly positive. For example, quarantine-friendly consumer AR such as product visualization has inflected in the past year; while post-Covid hybrid work environments will compel enterprise remote-AR support.

“Covid-era dynamics will have a net-positive impact as sheltered-in entertainment, visually-enhanced shopping and socially-distanced productivity played to AR’s strengths,” said Boland. “This means that Covid-accelerated adoption and digital transformation over the past year have exposed the technology, thereby accelerating its longer-term sustained adoption. Mobile AR will have a key role in the post-Covid world”

Report Availability

Mobile AR Global Revenue Forecast, 2020-2025 is available to ARtillery PRO subscribers, and more can be previewed here. VRARA members can access this report through a discounted subscription to ARtillery Pro.

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market-sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. Learn more here.

New Report: VR Revenue to Reach $12.2 Billion by 2024

ARtillery Intelligence’s report, VR Global Revenue Forecast 2019-2024 examines the VR market opportunity. Subscribe for the full report. VRARA members get a discount.

ARtillery Intelligence has released a new report that projects VR revenue to grow from $4.98 billion in 2019 to $12.19 billion in 2024, a 19.6 percent compound annual growth rate. Entitled VR Global Revenue Forecast, 2019-2024, the report examines VR revenue totals and subsegments – including consumer and enterprise spending.

Consumer spending holds a leading share of VR revenues with an estimated $2.7 billion in 2020, which includes hardware and software. Enterprise spending trails due to relatively narrow applicability in industrial settings, while consumer spending is driven by gaming’s dominance as a VR use case. This will broaden to other categories over time, including entertainment and communications.

VR’s biggest accelerant is Facebook’s ongoing investments, including Oculus Quest 2. Facebook has priced the device competitively at $299 (64 GB base model). This competitive pricing is part of Facebook’s longer-term strategy to sacrifice margins to build market share and to get more people into VR.

“Quest 2 has an unmatched quality-to-price ratio with an impressive spec sheet and a mainstream-friendly price tag,” said ARtillery Intelligence Chief Analyst Mike Boland. “This flows from Facebook’s aggressive pricing strategy that’s part of a larger play to build market share and cultivate a network effect. It’s classic Facebook.”

2020 has also brought opposing forces: VR gaming aligns with Covid-era consumer demand signals, but supply chain impediments have detracted hardware shipments. The net effect is a 10 percent decline in shipments this year, which is projected to bounce back by the end of 2021.

“VR demand remains high, so 2020 challenges were more about supply,” said Boland. “These setbacks have been alleviated to some degree by Facebook’s efforts to reinforce its supply chain to meet heavy demand for Quest 2. This appears to be working so far with fewer stock shortages than it had last year at this time.”

Report Availability

VR Global Revenue Forecast, 2019-2024 is available from ARtillery Intelligence (VRARA members can get a discount here).

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market- sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. To learn more, go to

Subscribe for the full report. VRARA members get a discount.

New Report: Headworn AR Revenue to Reach $13.4 Billion by 2024

ARtillery Intelligence’s report, Headworn AR Global Revenue Forecast 2019-2024 examines the AR glasses market opportunity. Subscribe for the full report. VRARA members get a discount.

ARtillery Intelligence has released a new report that projects headworn AR revenue to grow from $822 million in 2019 to $13.4 billion in 2024. Entitled Headworn AR Global Revenue Forecast, 2019-2024, the report examines glasses-based AR revenue totals and subsegments – including consumer and enterprise spending. This report follows ARtillery’s separate examination of smartphone-based AR spending.

Enterprise spending holds a commanding revenue share of AR glasses revenues with a projected $1.33 billion in 2020, compared with consumer spending of $22.1 million. These totals consist of both hardware and software. Enterprise spending dominance is due to productivity gains demonstrated in industrial settings, where AR’s line-of-sight guidance boosts speed to task-completion and error reduction. Consumer AR meanwhile trails in revenue, as the technology isn’t yet stylistically viable for consumer markets – a factor that could flip with Apple’s projected market entrance.

“Apple’s AR glasses released in the 2022 timeframe could create a classic Apple halo effect by boosting consumer awareness and demand for AR glasses,” said ARtillery Intelligence Chief Analyst, Mike Boland. “Rather than the common graphically-rich connotations of AR, Apple’s glasses will likely be simple and stylish, while accomplishing tasks such as notifications or LiDAR-powered ways that help people see better. Think of it like the iPhone 1 of AR glasses.”

As is the case across the global economy, AR glasses revenues will be impacted by the ongoing COVID-19 global pandemic. Given that the consumer AR glasses market is so small to begin with, it will be minimally impacted. Enterprise markets could meanwhile suffer to some degree due to recessionary spending as well as supply-chain impediments. However, enterprise AR use cases support COVID-era demand signals, potentially offsetting those losses.

“Certain flavors of enterprise AR like remote assistance and guided maintenance align with social distancing requirements in field-work and industrial settings,” said Boland. “This could mean that COVID-pressured adoption exposes the technology in ways that lead to new habits for enterprises that sustain into the post-COVID era of semi-remote work.”

Report Availability

Headworn AR Global Revenue Forecast, 2019-2024 is available from ARtillery Intelligence (VRARA members can get a discount here).

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market- sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. To learn more, go to

Subscribe for the full report. VRARA members get a discount.

New Report: Mobile AR Revenue to Reach $21 Billion by 2024

ARtillery Intelligence’s report, Mobile AR Global Revenue Forecast 2019-2024 examines mobile AR’s market opportunity. Subscribe for the full report. VRARA members get a discount.

ARtillery Intelligence has released a new report that projects mobile AR revenue to grow from $3.9 billion in 2019 to $21.02 billion in 2024. Entitled Mobile AR Global Revenue Forecast, 2019-2024, it dives deep on mobile AR revenue totals and subcategories – including consumer and enterprise spending.

Enterprise productivity is the leading revenue category in 2020 ($2.58 billion), followed by AR advertising ($1.41 billion) and consumer in-app purchases ($1.38 billion). The latter comes mostly from player spending in Pokémon Go. 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. AR commerce-enablement software will be driven by similar factors.

"Several of these mobile AR revenue categories represent what we call AR as a Service, which are SaaS like AR offerings that enable companies to build AR experiences," said ARtillery Intelligence Chief Analyst, Mike Boland. "Those experiences can be visually-guided productivity in enterprise settings, or consumer-facing experiences -- an area we call B2B2C. In either case, these AR 'picks & shovels' will represent a large opportunity to meet the demand for democratized experience creation and accelerated time to market."

As is the case across the global economy, mobile AR sub-sectors will be impacted unevenly by the ongoing COVID-19 global pandemic. Given that software and digital products fare well in global lockdowns, the impact on mobile AR will be mostly positive. For example, quarantine-friendly consumer AR like social lenses are trending up; and social distancing compels enterprise remote-AR support.

"Covid-era dynamics will have a net-positive impact as sheltered-in entertainment, visually-enhanced shopping and socially-distanced productivity play to AR's strengths," said Boland. "This means that Covid-pressured adoption in the near term could expose the technology, thereby accelerating its longer-term sustained adoption."

Report Availability

Mobile AR Global Revenue Forecast 2019-2024 is available from ARtillery Intelligence (VRARA members can get a discount here).

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market- sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. To learn more, go to

Subscribe for the full report. VRARA members get a discount.

New Report: 19% of U.S. Adults Have Tried VR

ARtillery Intelligence’s latest report, VR Usage & Consumer Attitudes examines original consumer survey data. Subscribe for the full report. VRARA members get a discount.

ARtillery Intelligence and Thrive Analytics have released a new report: VR Usage & Consumer Attitudes, Wave IV. ARtillery Intelligence authored survey questions and a narrative report while Thrive Analytics administered the survey through its established survey engine and ongoing Virtual Reality Monitor research.

Highlights include the fact that 19 percent of consumers have used VR, up from 16 percent in last year’s study. More importantly, they’re using it often: 31 percent of respondents use VR at least monthly. This is a telling indication of VR’s potential, given that active use is a key success factor tied to revenue and user retention.

VR users are also highly satisfied: 55 percent reported extreme or moderate satisfaction. However, it’s not all good news. Non-VR users have relatively low interest in VR ownership, with 59 percent citing their reason for disinterest as just not interested. This disparity between user satisfaction and non-user disinterest represents key marketing and logistical challenges for VR.

“VR’s immersive format is a double-edged sword,” said Mike Boland, Chief Analyst of ARtillery Intelligence. “It’s captivating users for its revolutionary jump from traditional content formats. But you have to see it to believe it, and it’s hard to convey that experience to non-users through traditional marketing. This will be alleviated over time through more cultural acclimation to VR and lowering access friction through things like standalone headsets.”

Standalone VR – embodied by Oculus Quest, Oculus Go, and other emerging headsets — don’t require a separate and costly PC and also eschew cumbersome wires and the need to set up positional tracking systems. Though still early, standalone VR already shows worthwhile market traction in the hardware itself, as well as engagement levels and software/game sales.

The Virtual Reality Monitor™ applies Thrive Analytics’ acumen and time-tested practices in survey research. The VR survey in this wave (Wave IV) included a sample of more than 1,000 U.S. adults. Furthermore, four completed waves of research now enable robust longitudinal analysis and trend evaluation. Thrive Analytics and ARtillery Intelligence also produce a corresponding AR report which will be published next month.

“AR and VR are still in early-adoption phases,” said Thrive Analytics managing partner Jason Peaslee. “There are still technology challenges, but we think AR & VR have the ability to transform the way people work, connect, and learn. We’re excited about the prospects, and committed to measuring them.”

Report Availability

VR Usage & Consumer Attitudes, Wave IV is available through ARtillery Intelligence (VRARA members can get a discount here). Deeper access to the base data and additional strategic analysis can be obtained from Thrive Analytics.

About ARtillery Intelligence

ARtillery Intelligence chronicles the evolution of spatial computing, otherwise known as AR and VR. Through writings and multimedia, it provides deep and analytical views into the industry’s biggest players, opportunities and strategies. Products include the AR Insider publication and the ARtillery PRO research subscription. Research includes monthly narrative reports, market- sizing forecasts, consumer survey data and multimedia, all housed in a robust intelligence vault. To learn more, go to

About Thrive Analytics

Thrive Analytics is a leading digital marketing research and customer engagement consulting firm. With clients spanning leading national brands as well as publishers and agencies serving the small business community, it pairs proprietary market research services and data analytical tools with time tested business insights and methodologies to help organizations measurably improve customer experience, loyalty and sales results. Its mission is to provide superior research and support services that inspire clients to make smarter decisions.

About Virtual Reality Monitor

Virtual Reality Monitor is Thrive Analytics’ proprietary survey of virtual reality/augmented reality technology users. These surveys, conducted semiannually, track the adoption rates, usage, satisfaction levels, profiles and many other areas related to VR/AR users. Each wave has a customizable section for client specific inquiries. Results & key insights are communicated in advisory reports & presentations, charts & infographics, newsletters & articles and custom data views. Information from these studies are used by marketers, product managers, consultants and other people working in the technology space.

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Lessons from AR Leaders, Part III: The Field (New Report)

ARtillery Intelligence’s latest report, Lessons from AR Leaders, Part III: The Field examines AR usage and revenue leaders, and the strategic implications for AR success. Subscribe for the full report. VRARA members get a discount.

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience and interface design?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only do the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution, as well as transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This started in Part I of the report series with Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go, which we examined in Part II of the series. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

After examining these proven leaders, we now turn attention in the third and final installment of this series to emerging players that show signs of potential. Though earlier and unproven, they show promise and adherence to best practices examined in parts I & II. And they show new best practices worth noting.

These upstarts include 8th Wall, Ubiquity6, and Tilt Five. They also include established brands entering AR, such as Houzz, Instagram and Pinterest. This seemingly random sample shows signs of product and business model traction, which we’ll examine in the coming pages. The goal, as always, is to triangulate best practices and extract tactics and takeaways for AR players today.

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Lessons from AR Revenue Leaders, Part II: Niantic

ARtillery Intelligence’s latest report, Lessons from AR Revenue Leaders, Part II: Niantic examines AR usage and revenue leaders, and the strategic implications for AR success. Subscribe for the full report. VRARA members get a discount.

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro-categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience and interface design?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending behavior in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only does the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution, as well as transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. And by “success,” we mean large-scale consumer traction and revenue. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This includes Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

Other consumer AR exemplars include Houzz and Instagram. Emerging AR players also show early signs of traction that’s worth examining, such as Tilt Five. Altogether, how do we triangulate best practices and extract tactics and takeaways for AR players today?

We’ll do just that in the coming pages, continuing from Part I in which we examined Snapchat. We now pick up the discussion with Niantic and its flagship, Pokémon Go. This draws from the rigor of market watching and analyst work. We’ll synthesize these findings, pursuant to the core mission of empowering you with a knowledge position.

Subscribe for the full report. VRARA members get a discount.

Lessons from AR Revenue Leaders, Part I: Snap

ARtillery Intelligence’s latest report, Lessons from AR Revenue Leaders, Part I: Snap examines AR usage and revenue leaders, and the strategic implications for AR success. Subscribe for the full report. VRARA members get a discount.

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience design and interface?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending behavior in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only does the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution and transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. And by “success,” we mean large-scale consumer traction and revenue. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This includes Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

Other consumer AR exemplars include Houzz and Instagram. Emerging AR players also show early signs of traction that’s worth examining, such as Tilt Five. Altogether, how do we triangulate best practices and extract tactics and takeaways for AR players today?

We’ll do just that in the coming pages, starting with Snapchat. This draws from the rigor of market watching and analyst work – including daily editorial coverage of our sister publication, AR Insider. We’ll synthesize all of these things, pursuant to the core mission of empowering you with a knowledge position.

Subscribe for the full report. VRARA members get a discount.

Spatial Computing: 2019 Lessons, 2020 Outlook

ARtillery Intelligence’s latest report, Spatial Computing: 2019 Lessons, 2020 Outlook examines 2019’s biggest lessons in spatial computing and the outlook for 2020. Subscribe for the full report. VRARA members get a discount.

They say that patience is a virtue. This applies to the current state of the spatial computing industry. After passing through the boom and bust cycle of 2016 and 2017, the last two years were more about measured optimism in the face of industry shakeout.

At the precipice of 2020, that leaves the question of where we are now? Optimism is still present but AR and VR players continue to be tested as high-flying prospects like ODG, Meta and Daqri dissolve. These events are resetting expectations on revenue outcomes.

But more than the ‘how much?” is a question of “when?” Market timing is quickly becoming a prominent factor to determine success of spatial computing players. This is a common factor in tech cycles historically. Spatial computing will be no different.

Speaking of history, spatial computing follows a pattern similar to the early 2000’s eCommerce bubble. Exuberance is followed by market correction, followed by the slow progression that eventually meets and exceeds early projections… but not until years later.

The good news is that this slow uphill progression has already started, and we believe the worst is behind us. Though the broader tech and media worlds have shrugged off AR and VR as fads that died in 2017, Industry subsectors are signaling growth by quietly gaining traction and revenue.

This includes AR-based advertising. ARtillery Intelligence projects it to grow from $453 million last year to $8.8 billion by 2023. This outlook follows the momentum of advertiser adoption, as well as the continued investment of tech leaders like Facebook and Snap.

There’s also a robust support industry germinating, including “building blocks” which are endemic to this period of any tech sector. Represented by tools such as Unity, Adobe Aero, and 8th Wall, AR-as-a-Service (ARaas) will be a major AR revenue category.

AR’s health also hinges on the outcome of Apple’s rumored AR glasses. Apple has a track record of mainstreaming emerging tech, and the AR industry is hoping for that halo effect. But based on signals we track, this will come a few years past the rumored 2020 launch.

Meanwhile, adjacent sectors will accelerate AR adoption and development. The broader wearables segment is growing rapidly, and will benefit AR by acclimating consumers to wearing tech on their bodies. 5G, self-driving cars and other areas will likewise feed into AR.

There are also lots of positive signals for market growth in VR. Facebook/Oculus continues to invest in hardware subsidies and loss-leader pricing to jumpstart a network effect. The result of this investment is high quality and consumer-friendly price points for Oculus Go and Quest.

What do all of these signals collectively tell us? And where do they point for 2020 outcomes? We’ll unpack the full list of market factors and 2019 lessons in this report, pursuant to illuminating likely paths for spatial computing in 2020. A robust ecosystem is (slowly) building.

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VR Revenues Projected to Reach $14.8 Billion by 2023 (New Report)

ARtillery Intelligence’s latest report, Global VR Revenue Forecast, 2018-2023 examines VR revenue performance and projections across several sub-sectors and revenue categories. Subscribe for the full report. VRARA members get a discount.

The virtual reality sector continues to show early-stage characteristics, including erratic levels of interest and investment. But how big is it, and how big will it get? ARtillery Intelligence has quantified the sector’s revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery Intelligence’s VR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has constructed disciplined and independent market-sizing models. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on VR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence tracks.

In fact, you may notice that VR revenue projections in outer years are lower than figures you see elsewhere. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables (market-sizing methodology is detailed here).

The following pages quantify and project figures within several revenue categories, as well as hardware unit growth. Bulleted insights are included throughout to qualify the revenue drivers and rationale behind the numbers. The goal, as always, is to empower you with a knowledge position.

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Mobile AR Strategies & Business Models (New Report)

Come meet us at the VR/AR Global Summit Nov 1-2

ARtillery Intelligence’s latest report, Mobile AR Strategies & Business Models examines revenue models in consumer-based AR that are bearing fruit. Subscribe for the full report. VRARA members get a discount.

AR’s early stages are defined by lots of experimentation to see what works natively in this new medium. That goes for product design as well as business models. What do consumers want and how much are they willing to pay for it? These questions continue to be a moving target.

Questions are also being answered by AR pioneers like Snap and Niantic, who are operating at scale. And by “scale” we mean occasionally Superbowl-sized audiences, and revenue to go with it. But the key word is occasional, as these AR exemplars are the exception rather than the rule.

But there are still valuable lessons to gain from these leading indicators. Though the AR sector will twist around and take shape over the next few years (as historically seen in tech), there are early lessons to learn in what product and business models are working so far.

Some of these signals are already evident in ARtillery Intelligence’s consumer survey with Thrive Analytics. There, we see lots of explicit sentiments from consumers about how they’re using AR, how that’s changing (over three waves of existing research) and what they want to see next.

Takeaways from that survey include the continued popularity of AR gaming (Pokémon Go) and social experiences (AR lenses). But there’s also growing interest in emerging forms of AR such as visual search (Google Lens), navigation (Google Live View) and in-store retail commerce.

But what are the business models that are developing around this evolving consumer behavior? Though varied, we’ve begun to segment these models into three main categories (and several sub-categories). They include AR advertising, in-app purchases and AR-as-a-service.

The first two are fairly well known, though they’re developing in nuanced ways examined in this report. But the third category is a less-discussed revenue category where brands, retailers and app developers pay for tools to build AR experiences for their customers.

This carves out a new category we’re calling B2B2C, which includes software such as Unity, Amazon Sumerian, Adobe Aero and other tools to create AR experiences. Though enterprises are buying and deploying the technology, the AR experiences end up in consumers’ hands.

Adding up all three categories mentioned above and examined in this report, it’s a $1.44 billion market, growing to $20.3 billion by 2023. The common thread is AR technologies where the end users are consumers on mobile devices as opposed to industrial enterprises and/or headworn AR experiences.

This report examine each of these revenue categories and how they’re evolving. What are their business models, best practices and strategic takeaways? The goal, as always with ARtillery Intelligence Briefings, is to empower you with a knowledge position.

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VR Usage & Consumer Attitudes (New Report)

ARtillery Intelligence’s latest report, VR Usage & Consumer Attitudes examines original consumer AR survey data. Subscribe for the full report. VRARA members get a discount.

How do consumers feel about VR? Who’s using it? What devices and apps do they prefer? And what do they want to see next? Perhaps more important, what are non-users’ reasons for disinterest? And how can VR software developers and hardware players optimize product strategies accordingly?

These are key questions at VR’s early stages that we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3,100 U.S. adults in Thrive’s established consumer survey engine. And we’ve analyzed the results in a narrative report.

This follows similar reports we’ve completed over the last two years. Wave III of the research now emboldens our perspective and brings new insights and trend data to light. All three waves represent a collective base of 7,065 U.S. adults for a robust longitudinal analysis. This will continue to improve.

Meanwhile, what did we find out? At a high level, 16 percent of consumers surveyed have bought or used a VR headset, up from 11 percent in 2018. More importantly, VR users indicate high levels of satisfaction with the experience: 67 percent reported extreme or moderate satisfaction with VR.

As for price sensitivity, demand seems to inflect at $400 and $200. These are interestingly the price points for Oculus headsets including Quest, Rift S and GO. This indicates Oculus’ competitive edge aggressive price competition and accelerating market share, congruent with our separate projections.

Furthermore standalone VR – embodied by Oculus Quest, Go and other emerging headsets – represents a key inflection point for VR this year. Though still early (this survey was fielded before Quest’s market launch), standalone VR addresses many consumer objections evident in this survey.

However, it’s not all good news: Non-VR users report relatively low interest in VR ownership – 27 percent, down from 31 percent in 2018 – and explicit lack of interest. This downward trend in interest is concerning for VR but isn’t surprising given the dip in excitement we’ve anecdotally observed.

Moreover, the disparity between current-user satisfaction and non-user disinterest underscores a key challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges for the industry to push that first taste.

The same challenge was evident in our corresponding AR report, but mobile AR’s adoption barriers are lower. This is nonetheless a common challenge for immersive technologies. It will take time, acclimation and price reductions before they reach a more meaningful share of the consumer public.

These points join several other strategic implications that flow from latest consumer VR sentiments. We’ll examine those takeaways in the coming pages, including the latest wave of findings, and our narrative analysis for what it means. The goal is to empower you with a greater knowledge position.

Subscribe for the full report. VRARA members get a discount.

22% of U.S. Adults Use Mobile AR (new report)

ARtillery Intelligence’s latest report, AR Usage & Consumer Attitudes examines original consumer AR survey data. Subscribe for the full report. VRARA members get a discount.

How do consumers feel about mobile AR? Who’s using it? How often? And what do they want to see next? More importantly, what are non-users’ reasons for disinterest? And how can app developers and anyone else building mobile AR apps optimize product strategies accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3000 U.S. adults in Thrive’s established survey engine. The results are in and analyzed in the latest ARtillery Intelligence report.

This follows the last few months’ ARtillery Intelligence Briefings, which examined social and commerce-based AR. Now, a deeper view into real consumer usage and attitudes validates those narratives while providing new dimension on mobile AR strategies and opportunity spotting.

AR Approaches Adolescence

As for the findings, mobile AR usage is up to 22 percent of the U.S. population. These users are mostly experiencing mobile AR through apps, such as those built on ARkit and ARCore. But we see trending towards lower-friction experiences such as “AR-as-a-feature” and web AR.

These formats have advantages of less friction. Web AR can have easier session launches and compatibility given that it takes place in the mobile browser. AR as a feature meanwhile takes place within already-popular apps. Pokemon Go and Social Lenses are examples of the latter.

Users also appear active and engaged across the board, with more than half reporting they use mobile AR at least weekly. The top app category is gaming, which we attribute to Pokémon Go’s popularity. But other key categories, such as Social AR and visual search, are on the rise.

That includes commerce-related AR like product visualization. And utilities like visual search could represent AR’s first truly mainstream killer app and “all-day” use case. We’re at the stage in AR’s lifespan when utilities will start to emerge to challenge gaming & social use cases.

Double-Edged Sword

Mobile AR users also indicated high levels of satisfaction with the experience. But beyond these and a few other positive signals, there are some negative signs. For example, non-mobile AR users report low likelihood of adopting soon, and an explicit lack of interest.

This disparity between current-user satisfaction and non-user disinterest continues to underscore a key challenge for AR: you have to “see it to believe it.” In order to reach high satisfaction levels, apps have to first be tried. This presents marketing challenges to push that “first taste.”

Put another way, AR’s highly visual and immersive format is a double-edged sword. It can create strong affinities and high engagement levels. But the visceral nature of its experience can’t be communicated to prospective users with traditional marketing such as ad copy or even video.

The same challenge was uncovered in our corresponding VR report last July (we’ll publish the second wave in Q3). This makes it a common challenge with immersive media like AR and VR. It will take time and acclimation before they reach a more meaningful share of the consumer public.

Meanwhile, there are strategies to accelerate that process and to build AR apps that align with consumers’ current standards. We go deep on those strategies in the latest report.

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Will AR's Killer App Be Social? (new report)

ARtillery Intelligence’s latest report, Social AR: Spatial Computing’s Network Effect examines the Social AR opportunity. Subscribe for the full report. VRARA members get a discount.

One of the biggest questions nagging the AR sector is, what will be its killer app? And when will it arrive? The medium needs such an accelerant to legitimize and bring AR into mainstream acceptance – something it’s failed to do in the 18-months since Apple’s ARkit launch.

We’ve speculated in past reports that killer apps will likely extend beyond the novel and “sexy” attributes that have thus far driven the industry’s speculation, imagination and design (e.g. games). It will rather be something more mundane that provides all-day utility, like visual search.

But another category will vie for the position of AR killer app: social. Indeed, you could argue that a social AR killer app has already arrived and accelerated mass acceptance: social lenses. We see these as an important AR “gateway drug,” but only a glimpse into social AR’s true potential.

Simplified view: See report for full data set.

Synchronicity

One thing missing from social AR lenses – though popular through Snapchat and Facebook – is meaningful social interaction. More “augmented media” than augmented reality, they’re created in isolation then shared with friends to be consumed asynchronously at a different time or place.

But true social AR will combine this time/place-shifted paradigm – which will still be valuable to achieve scale — with synchronous AR. This will rely on technically complex multi-player functionality, a key tenet of the AR cloud. But when it arrives, it will unlock new use cases.

Moreover, the multi-player use case inherently accelerates usage and adoption through viral growth. It can also benefit from the fundamentals of network effect. With each node (user) added to shared AR experiences, the value and appeal of those experiences can grow exponentially.

Simplified view: See report for full data set.

Real World MMO

Beyond the multiplayer angle, augmentation a natural fit for social interaction. Extending from social lenses (face filters, etc.), next-generation graphical overlays will include real-time layers of information that people choose to share with others through live AR overlays as they walk around.

These shared titbits could be mood, relationship status or stylistic accouterments. The latter opens the door for business models around the exchange of virtual style items. This builds on the concept of marketplaces for digital identity, manifesting today in communities like Fortnight.

Speaking of which, one construct for socially-oriented AR is – as Ubiquity 6 CEO Anjney Midha puts it – “an MMO for the real world.” This envisions layers of virtual worlds all around us, dynamically activated through AR interfaces, while managed and permissioned by creators.

Simplified view: See report for full data set.

And business models are already forming. AR lenses — the precursor to this vision — drove more than $400 million last year. But questions remain. Who will build this? What will the ecosystem consist of? Will there be open platforms for developers to create shared spatial experiences?

We tackle these questions in our latest report and will unpack some of its findings here in the coming weeks. But the ongoing evolution, user behavior and analysis, just like any early-stage technology, will happen over the course of years. Stay tuned for lots more.

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What's the State of AR Commerce? (New Report)

This post is adapted from ARtillery Intelligence’s latest report. To access the report and full XR intelligence library, subscribe here (VRARA members receive a discount).

There are several forms of monetization that will develop for augmented reality (AR). In past reports, we’ve examined opportunities for its role in advertising (consumer-facing) and industrial productivity (enterprise-facing). The ROI case continues to strengthen in these and other areas.

One particularly promising area will be AR's role in influencing and fulfilling consumer purchases. Extending from (but different than) AR advertising, AR commerce involves graphical overlays that inform consumers and demonstrate product attributes in physical retail or e-commerce contexts.

For example, AR-pioneering retailers like Walmart let consumers activate product details in store aisles by pointing their smartphones at those items. Employing computer vision and object recognition from product databases, this empowers shoppers and breeds customer loyalty.

Tech giants like Google and Amazon have done similar. By pointing your phone at items in the real world, informational overlays can be triggered to contextualize items. Moreover, transactional calls to action are included to capture consumers’ wallets during these high-intent visual searches.

This makes AR commerce a key part of the future of these tech giants’ user experiences – mapping closely to their core businesses like search and e-commerce. It therefore holds lots of priority and investment – both of which will accelerate this sub-sector of AR in the near term.

Beyond visual search (pointing your phone at items to contextualize or buy), AR commerce can work in the reverse manner. In other words, “product visualization” is a key AR commerce modality in which consumers digitally place 3D product mockups in their surroundings to see how/if they fit.

As you can imagine, this use case maps particularly well to home goods, or large and bulky items that require a more informed purchase in terms of fit and style. For that reason, furniture players like Wayfair and IKEA have invested in such AR features, as have auto manufacturers like BMW.

Add all of these factors together and AR commerce will be one of the most tangible and revenue-generating “flavors” of AR in the near term. ARtillery Intelligence projects that $6.1 billion in annual transaction value (value of goods purchased) will flow through AR interfaces by 2022.

Beyond near-term benefits and monetization, mobile AR commerce developments will serve a longer-term end: AR glasses. The tactics, business models and consumer acclimation that happen around smartphones will seed next decade’s glasses-based AR commerce – the real endgame.

This post is adapted from ARtillery Intelligence’s latest report. To access the report and full XR intelligence library, subscribe here (VRARA members receive a discount).

XR's 2018 Lessons, 2019 Predictions (New Report)

This post is adapted from ARtillry Intelligence’s latest report. To access the report and full XR intelligence library, subscribe here (VRARA members receive a discount).

2018 was a reflective year for XR. After an exuberant 2016, followed by a corrective 2017, XR industries settled into a moderate pace. This includes reset expectations on the size and timing of AR & VR markets, as well as acceptance that aspirations will take longer to materialize.

But we saw deep-pocketed tech giants charge ahead with XR. With strong contention that XR represents the next computing shift, they’re investing in the future of their platforms by gaining early market share and technological edge. And they’re each attacking XR from different angles.

Apple is investing in AR to fertilize the ground for its future hardware: AR glasses. Google is cultivating visual search, a close cousin of AR, as a search modality. Amazon is embracing AR to boost e-commerce, and Facebook is spending billions to position a VR powerhouse.

Despite XR market softness, it was these moves from tech giants that provided confidence in 2018 for the eventual market arrival. Indeed, there’s no bigger vote of confidence in a technology and a market than billions of dollars in long-term bets. We believe this will continue into 2019.

One of those investments will be Facebook’s continued subsidization of VR headsets, through aggressive pricing. It’s executing a classic loss-leader approach to gain early market share and build up the installed base of Oculus headsets. This is already accelerating consumer adoption.

We also learned important lessons in 2018 about AR adoption and behavior. Mobile AR, despite its potential scale, is gated by consumer AR interest and app quality. And these factors need more time in the oven. The quality of many ARkit apps hasn’t sold the masses on AR just yet.

But though the scale is relatively low, mobile AR users are showing strong engagement in terms of frequency and other behavior. In formats where engagement is measured heavily, such as AR ads(branded AR lenses), performance indicators and advertiser ROI are already quite strong.

Meanwhile, there were wild cards played in 2018. Magic Leap One finally launched, coupled with even more ambitious promises. Apple’s acquisition spree and patent filings point to its AR glasses circa 2021. And the AR Cloud’s importance emerged into the collective consciousness.

So the question is, where are we now with these and other XR sub-sectors? And what can we expect in 2019? Drawing from ARtillry Intelligence’s deep XR coverage, we ventured to answer these questions. We’ll look back at 2018 to extract measurable lessons, and predict XR’s directions in 2019.

This post is adapted from ARtillry Intelligence’s latest report. To access the report and full XR intelligence library, subscribe here (VRARA members receive a discount).

XR Revenues on Pace to $56 Billion in 2022 (New Report)

This post is adapted from ARtillry's latest Intelligence Briefing, XR Global Revenue Forecast, Fall Edition. To receive the report and access the full XR intelligence library, subscribe here (VRARA members receive a discount).

There’s been volatile interest and investment in AR & VR over the past 24 months. But how big are these sectors, and how big will they get? ARtillry Intelligence has quantified the revenue opportunity in several AR & VR product areas. The result is our latest XR revenue forecast.

At a high level, we project  Global AR & VR product revenues to grow from U.S. $3.8 billion in 2017 to U.S. $56.4 billion in 2022, a 71 percent compound annual growth rate. This includes AR, VR and the enterprise and consumer segments of each (full list of inclusions is below)

The largest share of revenue in 2017 was held by VR (driven by consumer markets) which will shift over time as AR (driven by enterprise markets) gains momentum and revenue dominance through 2022. This shift is notable as AR comprises 29% of revenues in 2017 and 80% in 2022.

In VR, consumer revenue eclipses enterprise by 3-1 in 2022. Standalone VR like Oculus Go will accelerate consumer adoption. VR’s form factor is also aligned more with gaming and entertainment as opposed to job functions where sensory isolation isn't possible (e.g. industrial).

Within AR, the opposite is true: enterprise revenue outweighs consumer revenue by as much as 2-1 over the next five years. Head-worn AR’s form factor is well-aligned with enterprise productivity and demonstrable ROI in manufacturing, assembly and medical procedures.

But despite those advantages, there’s still enterprise resistance and risk aversion. We believe momentum will build up to a tipping point in 2020, after which we’ll see accelerated adoption. So it will build slow then happen fast, just like we saw with enterprise smartphone adoption.

Head-worn AR will find a home with consumers, however, its specs and stylistic realities inhibit several consumer use cases in the near term. Apple’s potential 2021-2022 introduction of smart glasses will shift AR’s momentum and revenue share towards consumer spending.

By 2022, enterprise AR’s revenue dominance over consumer AR will decelerate as smart glasses begin to penetrate consumer markets. Until then, mobile will dominate consumer AR, with most revenue derived from software as opposed to hardware (smartphone sales aren't counted).

Mobile AR software models will continue to follow the path set in the smartphone app economy. There, the prevailing model for higher ARPU is in-app purchases. It’s been proven for both yield optimization and consumer acclimation. That's especially true in an emerging/unproven area.

In fact, in-app purchases (IAP) is a model that’s already proving to resonate with consumers. At these early stages of mobile AR, many aren’t yet ready to commit upfront dollars for apps. This can be seen in our recent survey data where IAP shows early consumer comfort levels.

Moreover, in-app purchases have been validated within AR, considering it’s Pokemon Go’s primary revenue source. We’ll see that extend to other IP that builds on its architecture and game mechanics, including Harry Potter, Wizards Unite and apps built on Niantic's Real World Platform.

But those are just a few revenue drivers. We go deep on the dynamics and drivers across the XR spectrum including advertising and other revenue categories. For more, see ARtillry's latest Intelligence Briefing 2018 XR Global Revenue Forecast, Fall Edition.

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