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As we roll into 2025, it’s time for our annual ritual of synthesizing the lessons from the past twelve months and formulating the outlook for the next twelve. 2024 was an incremental year for AR & VR, which both continue to gradually push forward in gaining mainstream traction.
Highlights include the rise of mixed reality as a standard in VR, non-display AI glasses, and next-gen hardware like Meta Orion and Snap Spectacles. We also saw the symbolic and practical end of the previous era of XR, as defining devices like Microsoft HoloLens retreated from the market.
So where is spatial computing, and where is it headed? Our research arm ARtillery Intelligence’s recent report Spatial Computing: 2024 Lessons, 2025 Outlook tackles these questions. After recently publishing 2025 predictions here on AR Insider, we shift gears to 2024 lessons.
To that end, what were the biggest takeaways in 2024 in the wide world of spatial computing? There were many, but today we’ll zero in on XR’s most mature and penetrated format: VR. What’s the state of the sector? Where is value being created today? And who’s leading the way?
The Landscape
After the last installment of this series covered headworn AR, we now move on to its spatial cousin, VR. It’s a promising technology in entertainment, gaming, and some enterprise functions. But it’s not the revolution in computing that was once touted. Traction continues to be challenged.
Global VR revenue is projected to grow from U.S. $11.02 billion in 2023 to U.S. $19.75 billion in 2028. These figures are bisected by consumer and enterprise markets. The latter is larger, driven by VR’s business case in areas such as immersive training and design collaboration.
Like in headworn AR – again, examined in the previous installment of this series – consumer spending will eventually catch up with and exceed enterprise spending – a common pattern in consumer technology. However, that sequence will take several years to unfold.
In either case, VR’s biggest accelerant is Meta’s investments, including billions in quarterly R&D spend. This buys the company a technological edge. Its investments also involve subsidizing hardware through a loss-leader approach that stimulates a larger installed base.
That’s in turn meant to spark a network effect and attract reach-driven content creators. To that last point, one factor that makes or breaks a given VR platform is content availability. Meta continues to invest in content by attracting developers to a larger hardware base.
The other thing that Meta does to attract developers is to acquire VR publishers and game studios. This not only injects cash into content creation, but it importantly incentivizes content creators to enter the market – and venture funding to fuel them – by demonstrating exit potential.
Mixed Feelings
Speaking of Meta, among all the events in 2024’s VR scene, the standout product was likely Meta Quest 3. Now, it’s also joined by its more affordable sibling – and Quest 2 successor – Quest 3s. Together, they complete a strong one-two punch in Meta’s VR product line.
Moreover, both devices cement mixed reality as a standard in modern VR headsets. In that way, 2024 was defined by the emerging class of VR devices that feature full-color HD passthrough cameras. These orient users to their surroundings and make experiences less insular.
But more importantly, cameras enable passthrough AR. By doing so, AR is given the chance to shine by incubating within VR. This could accelerate AR adoption by exposing it through a more penetrated vessel. From that, more users might get the chance to try AR and like what they see.
As background for those unfamiliar, passthrough video joins optical see-through AR as the two main approaches to AR. Advantages include more control of every pixel and better quality (definition, brightness, and contrast). However, the experience occurs through bulky VR headsets.
For that reason, passthrough AR will slim down over time, while optical see-through AR glasses gain graphical richness. Though some believe these two tracks will someday converge in a hybrid device, we believe they’ll continue to evolve in parallel and on their own respective paths.
Lastly, though Meta’s moves and investments accelerate and characterize the VR landscape, it’s not alone in defining the sector. HTC continues to release venerable devices such as Vive XR Elite and VIVE Focus Vision. Varjo and others likewise continue to push VR standards forward.
We’ll pause there and return in the next installation with more sub-sector breakdowns, including VR and mixed reality. Meanwhile, check out the full report.
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