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Like many analyst firms, market sizing is one of the ongoing practices of AR Insider’s research arm, ARtillery Intelligence. A few times per year, it goes into isolation and buries itself deep in financial modeling. One such exercise zeroes in on VR revenues.
This is one of the subdivisions of spatial computing – others include mobile AR and headworn AR. They’re all related and share technological underpinnings, but are driven by separate market forces such as their respective hardware bases (see methodology and inclusions).
So what did the VR forecast uncover? At a high level, Global VR revenue is projected to grow from $12.2 billion in 2024 to $18.9 billion in 2029, a 9.12 percent compound annual growth rate. This sum consists of consumer and enterprise spending and their revenue subsegments.
Drilling down, our latest Behind the Numbers installment breaks down the consumer-spending subset of the above figures. What are consumers spending on VR hardware as well as software? We’re talking about headsets and the experiences that run on those headsets.
Spending Segments
Starting at the top, consumer VR spending is projected to grow from $2.98 billion in 2024 to $5.18 billion in 2029, an 11.67 percent compound annual growth rate. This consists of hardware as well as software, games, experiences, and admissions to VR arcades or attractions.
Segmenting these consumer spending figures, the hardware portion is $1.46 billion in 2024, projected to grow to $2.46 billion in 2029. In units, that translates to 2.49 million in 2024 and 4.37 million projected by 2029. Sales are often greatest during Q4 holiday periods.
As for software, it’s projected to grow from $1.52 billion in 2024 to $2.73 billion in 2029. As noted, this consists of VR experiences such as game purchases. One-time purchases are the biggest source of spending, but greater growth is in subscriptions and in-app purchases.
As you can tell from the above figures, hardware and software are roughly even in current and projected consumer spending. In earlier stages of VR, hardware spending was greater as an installed base was established. As it often happens, this was then outpaced by software.
Formats & Flavors
Back to the various formats and flavors of consumer VR software, we have premium apps, subscriptions, and in-app purchases (IAP). Premium apps are usually purchased outright, while subscriptions involve monthly recurring payments to access a bundle of games.
The latter represents a growth area, as Meta recently reported that it has one million subscribers for the $8/month Horizon+, which now offers 100+ titles. Meanwhile, IAP could gain revenue share over time as it follows patterns seen in adjacent sectors such as mobile gaming.
IAP is also aligned with casual gaming, including growing formats like puzzlers and platformers. Moreover, as VR grows from early adopters to newer mainstream users, free-to-play games should grow in usage share, while IAP correspondingly grows in revenue share.
We’ve been saying something similar for the past few forecasting rounds, and it’s evident this trend is materializing. For example, Meta has reported 13 percent year-over-year growth in IAP, while Gorilla Tag has exceeded $100 million in lifetime gross revenue – mostly from IAP.
We’ll pause there and circle back in the next Behind the Numbers installment with more numbers & narratives. Meanwhile, check out the full report.