Extended reality market keeps on boosting

Renowned research firms such as SuperData and Statista analyze the current situation (Q3 2020) in this segment, strongly influenced by gaming, and anticipate very good indicators for the future.

Earnings of VR games for PC will reach US$189 million in 2020.
Earnings of VR games for PC will reach US$189 million in 2020.

Extended reality (XR) is an emerging term for all immersive technologies, including augmented reality (AR), virtual reality (VR), and mixed reality (MR), plus those that are yet to be created. Immersive (or XR) technologies extend the reality we experience by either merging the virtual and “real” worlds, or by creating a fully immersive experience.

According to SuperData, a Nielsen company, one of the most important global providers of market intelligence, PC VR games earnings are now on track to rise 119% year-over-year from US$86.1 million in 2019 to US$189 million in 2020, thanks to the release of Half-Life: Alyx and other major titles. Since its March launch, the Valve title has earned more than what all PC VR games combined made in 2019. Another VR entry in a classic first-person shooter franchise, Medal of Honor: Above and Beyond, will also launch in December. Finally, the recent release of Star Wars: Squadrons is contributing to PC VR earnings.

Regarding hardware, the original Oculus Quest was the top-selling VR headset of Q3 2020, and sales are set to jump with the launch of the Quest 2. The device sold 161,000 units in Q3, though that number would have been higher if retailers had not run out of stock partway through the quarter, as Facebook prepared to launch the Quest 2. Pent up demand, a lower price and holiday season gift-giving are all set to push Quest 2 sales up dramatically over the original at launch. Also, with Facebook now discontinuing the Rift S, many potential buyers of Oculus PC headsets are expected to shift over to the Quest 2. 2021 sales for the device are now expected to reach 3 million, up from a prior estimate of 2.6 million. Limited supply, not demand, held back sales of the Valve Index (one of the the next-generation VR headsets) during Q3. The headset continues to appeal to enthusiasts and 56,000 units were sold during the quarter. However, this total would have been significantly larger if Valve had been able to fulfill orders faster. Buyers must still wait at least eight weeks before receiving the device.

In terms of Statista’s numbers (the German company offers statistical, market and consumer behavior data), VR headset suppliers include HTC, Oculus, PlayStation and Valve, with unit shipments of VR devices expected to reach 12.5 million in 2020. While the consumer virtual reality market, divided into hardware and software segments, is forecast to reach US$2.6 billion in size in 2020 worldwide.


Investments in VR and AR companies are now projected to reach US$915 million in 2020, still down from 2019’s total of US$1 billion, but up from SuperData’s prior estimate of US$830 million. Prolonged lockdowns and work-from-home arrangements have shown the potential of XR in both personal and professional settings, and investors are taking note. Major Q3 XR funding developments include a US$54 million investment round in high-end VR headset maker Varjo and a US$40 million funding round in mixed reality (MR) company Nreal. (Magic Leap is not included in investment figures due to its outsize impact on the market.)

Widespread consumer adoption of AR/MR headsets is not expected to take off until at least 2023, despite Facebook’s newly announced AR glasses and Apple’s continued investment into the space. Issues that held back firms like Magic Leap and North, such as limited consumer use cases, are set to persist in the near future. As a result, the enterprise sector will generate over 70% of AR/MR hardware revenue through the end of 2022.

As the technology improves further, there is no doubt that the use cases of XR technologies will widen and develop as businesses and consumers alike realize the full potential, with the technology becoming as prominent as mobile devices are in today’s market.