Though AR continues to be challenged in gaining mainstream consumer traction, there are some bright spots to report. Specifically, revenue continues to gain momentum in mobile AR categories like advertising, commerce, and enterprise productivity.
To quantify those markets today and projected forward, ARtillery’s Intelligence’s latest revenue forecast does a deep dive on mobile AR. That includes several subsectors and moving parts such as consumer spending, enterprise spending, enablement software, and AR marketing.
To synthesize and summarize the report’s findings, the latest episode of ARtillery Briefs breaks things down, which you can see below in embedded video and narrative takeaways.
So what did the report uncover? At a high level, global mobile AR revenue will grow from $6.87 billion last year to just over $26 billion in 2025. The baseline for this growth is the installed base of 3.5 billion global smartphones — an increasing share of which are AR-enabled.
That total is fragmented into different platforms such as Facebook’s Spark AR, Snapchat’s Lens Studio, Apple’s ARkit, Google’s ARCore, and Web AR. And each of these has varying installed bases, the greatest of which today is Web AR, with about 3.1 billion compatible units.
Breaking down those installed bases further, Facebook’s Spark AR is estimated to have 1.6 billion AR-compatible smartphones, followed by ARkit (1.25 billion), TikTok (1.05 million), ARCore (891 million), and Snapchat (515 million). These figures represent 2021 year-end estimates.
But the figure that matters more is the de-duplicated sum of active AR users, which ARtillery pegs at 802 million globally by the end of 2021. That’s projected to grow to about 1.7 billion active mobile AR users year-end 2025, with varying market shares across the above platforms.
Picks & Shovels
Zeroing in on revenue, consumer mobile AR spending is projected to grow from about $1.4 billion last year to almost $4.6 billion by 2025. This includes AR experiences that consumers pay for, which is dominated today by in-app purchases, mostly in Pokémon Go.
Beyond digital goods, spending on AR-influenced physical goods is projected to exceed $12 billion this year. This is the transaction value of goods bought using “try before you buy” AR visualization. But this total doesn’t count as AR revenue per se, as AR itself isn’t being purchased.
ARtillery instead attributes AR’s proportionate role in the value chain by tracking spending on AR commerce-enablement software to make it all happen. This includes everything from 3D asset creation to processing and compression technologies to distribution channels.
These “picks & shovels” will be critical components of AR shopping or what we call camera commerce. For example, tools like Google Swirl could serve as important AR accelerants, as will experience creation engines like 8th Wall and infrastructure technology such as Mawari.
To put things further into perspective, the commerce-enablement piece examined above falls under the broader category of enterprise mobile AR. In total, this category of mobile AR spending is projected to grow from $5.5 billion last year to just over $21 billion in 2025.
This revenue total also includes media & content creation. This is software that enables companies to build AR for their customers (B2B2C). This will be a big opportunity as AR software providers meet the demand for democratized AR creation, and accelerated time to market.
Enterprise spending also notably includes ad placement, which is the dollars spent by brand advertisers to distribute AR experiences through paid ad campaigns. This is popular today with sponsored lenses but will branch into other high-value formats such as visual search.
Beyond all of the above spending areas, the revenue subsegment that enterprise mobile AR is most commonly known for is industrial and corporate productivity. This involves line-of-sight visualization through mobile devices for operational functions like maintenance or IT support.
All of the above just scratches the surface and you can see more in the full report. Meanwhile, one note in closing is that AR is well-positioned for a post-Covid world, especially in shopping where it supports both eCommerce and in-aisle consumer interactions in physical retail’s return.
Similarly in enterprise productivity, AR enables remote support in IT and manufacturing, which could resonate with post-Covid “hybrid” work structures that develop. This conduciveness to remote work will vary across verticals and job functions but AR is primed for broad applicability.
In all cases, AR may not be the revolutionary force that was touted in the industry’s circa-2017 hype cycle, but it will create meaningful value. It will continue gaining steady traction as an intuitive visual interface to improve and augment several aspects of our lives and work.
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