ARtillery Briefs is a video series that outlines the top trends we’re tracking, including takeaways from recent reports and market forecasts. See the most recent episode below, including narrative takeaways and embedded video.
AR continues to show early-stage characteristics, including schizophrenic interest and investment. But how big is it, and how big will it get? ARtillery Intelligence has quantified the revenue outlook, in the latest wave of its Global AR forecast, and AR Briefs episode (below).
So what did the firm find out? At a high level, AR revenue is projected 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 & commerce, and several combinations.
For example, consumer AR is a big category, growing to $7.9 billion by 2023. That consists of things that consumers pay for. The category is currently dominated by mobile AR in-app purchases such as Pokemon Go, which brought in $800 million last year and $2.65 billion to date.
This forecast round also began tracking hearables such as Airpods and Bose’s AR platform. Though hardware revenue isn’t counted in AR revenue totals (yet), it’s worth keeping an eye on as a foundation for “audio AR.” Device sales could grow to $31 billion by 2023.
AR as a Service
Enterprise AR is another big category, which is projected to grow to $19.5 billion by 2023. This is anything that enterprises pay for. Previously, it focused mostly on industrial AR, such as visualization support. But those projections have been dialed back due to current demand signals.
But partially offsetting that is projected growth in other categories of enterprise AR spending — again based on demand signals. These include “picks & shovels” B2B developer platforms like Unity that support the development of AR-based media, entertainment or commerce enablement.
This is part of what we’re calling AR as a service, which adopts lots of SaaS dynamics and economics and will grow to $6.6 billion by 2023. ARaaS also includes what we call B2B2C, which involves supporting retailers or brands that are building AR experiences for their customers
And then there’s advertising spend which is the biggest component of enterprise AR, growing to $8.8 billion by 2023. This is again informed by demand signals, not to mention the revenue and momentum for AR brand advertising from AR lens pioneers like Snap and Facebook.
Hardware Comes First
But one of the precursors for all of the above is the all-important hardware installed base. Today much of that comes from mobile AR, given smartphone ubiquity. That mobile AR addressable market is often cited as “1 billion units,” which is true if counting Apple ARkit and Google ARcore.
But as we examined recently, the real total is larger for mobile AR device compatibility if you pan back to other AR platforms such as web AR, Facebook’s Spark AR and Snap’s Lens studio. Facebook alone reaches 1.5 billion devices, and web AR has a potential reach of 2.97 billion.
But the number that matters more than all of those is active AR users. When tallying and de-duplicating them across platforms, the total comes to 334 million, growing to just over a billion by 2023. This is a more relevant figure when assessing mobile AR’s total addressable market (TAM).
As for AR headsets, they’ll grow from 130,000 in 2018 annual sales to 2.89 million in 2023 (correlating to an installed base of 5.05 million). This includes enterprise and consumer — the former leading in early years but giving way to Apple’s potential market entrance circa 2022.
Most of the above just scratches the surface, and you can see more detail in the full report, and episode of AR Briefs below. Meanwhile, it’s worth mentioning that, at a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic.
The firm believes AR growth will accelerate, but slower than industry proponents — including its own past figures admittedly — have projected. This requires an ongoing process of painstaking attention to market signals and constant course correction. Look forward to lots more of that.
See the latest episode of AR Briefs below for more
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