This post is adapted from ARtillery Intelligence’s latest forecast, AR Global Revenue Forecast, 2018-2023. It includes some of its data and takeaways. More can be previewed here and subscribe for the full report.

AR continues to show early-stage characteristics, including volatile interest and investment. But how big is it, and how big will it get? AR Insider’s research arm ARtillery Intelligence has quantified the revenue position and outlook, resulting in the fourth and latest wave of its AR forecast.

At a high level, the firm projects AR revenues to grow from $1.96 billion last year to $27.4 billion in 2023. That includes lots of moving parts and sub-sectors including consumer, enterprise, hardware, software, advertising and AR commerce enablement (full list of inclusions here).

Drilling Down

For example, consumer AR will grow to $7.9 billion by 2023, mostly consisting of in-app purchases from mobile AR. The forecast also tracks hearables for the first time, which will grow to $38 billion by 2023. It doesn’t yet count that as “AR revenue” but will be watching the segment closely.

Enterprise AR meanwhile will grow to $19.5 billion by 2023. This used to focus mostly on industrial productivity, such as visualization support. But this forecasting wave puts lots of emphasis on Enterprise B2B software categories like “ARaaS” developer platforms a la Unity and Niantic.

Also included in Enterprise AR is advertising spend. In fact, it’s the biggest component of enterprise AR, growing to $8.8 billion by 2023. This is largely informed by momentum for AR brand advertising and revenue signals from AR lens pioneers like Snap and Facebook.

Related to advertising is AR commerce. $12.7 billion in consumer spending will be influenced by or bought through AR interfaces (not counted as AR revenue). That correlates to $404 million in affiliate revenue for AR startups that enable that commerce (counted as AR revenue).

Laying a Foundation

One of the precursors for all of the above is the all-important hardware installed base. Today much of that comes from mobile AR compatibility. It’s cycling in fast and laying the foundation for scale in AR before AR glasses reach tenable specs for consumer adoption and realistic pricing.

The mobile AR installed base is often cited as “1 billion units.” This is true if counting only Apple (ARkit) and Google (ARcore) devices. However, it’s much more nuanced, given a fragmented set of platforms and delivery channels for mobile AR. So we went deep on each of these.

That includes web AR (2.97 billion), Facebook’s Spark AR (1.6 billion) and Snap’s Lens Studio (190 million). But the number that matters most is active AR users. When tallying and de-duplicating them across platforms, the total comes to 334 million, growing to 1.076 billion by 2023.

As for AR headsets, they’ll grow in unit sales from 130,000 in 2018 to 2.89 million in 2023. That correlates to an installed base of 5.03 million units in market by 2023. This includes enterprise and consumer, the former leading in early years but giving way to Apple’s market entrance in 2022.

Cautiously Optimistic

At a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but slower than many industry proponents have thought, due partly to the pace of adoption and other signals that ARtillery Intelligence tracks.

In fact, you may notice that AR revenue projections in outer years are lower than other figures you may have seen. They’re also lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as market watchers course-correct to market variables.

Stay tuned for more forecast tidbits and insights over the coming weeks. Meanwhile, find out more about the report methodology or access the entire thing here. There will be lots to unpack as the AR market unfolds and brings us a combination of expected outcomes and surprises.

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Disclosure: AR Insider has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.