Augmented Reality and Virtual Reality for Gaming Market Size Forecast to Reach $11.0 Billion by 2026

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The market for AR and VR for Gaming is forecast to reach $11.0 billion by 2026, growing at a CAGR of 18.5% from 2021 to 2026. The market is driven by the growing popularity and integration of AR and VR technologies in mobile phones and other wearable devices. Augmented Reality and Virtual Reality are considered to seamlessly offer the most exciting emerging technologies on the planet for today's life. The industries using the AR and VR technologies are forecasted to achieve the targeted valuation of over a Trillion dollars by 2025. However, AR has occupied a special place in the burgeoning mobile gaming world. Nearly 50% of global game market apps displays no sign to lift-up as the handset that comes incorporated with the built-in camera which serves as a great source of Augmented Reality gaming. The rising demand for AR in the mobile gaming as well as the larger world of gaming will drive the market growth through the usage of head mounted displays.

AR and VR for Gaming Market Segment Analysis – By Platform

In Platform Segment, mobile phones stood as the fastest growing subset with an estimated CAGR of 30% through 2020. These AR and VR Technology have always been associated with the gaming industry, due to various pop culture movies and shows that have brought about this association. The usage of AR and VR has taken overdue to launch of head mounted devices as well as AR games being launched on the mobile platform. In 2016, the release of Pokemon Go, brought a lot of people out of their houses to interact and catch these“Pokemon”. It involved visiting rest stops such as a café or a mall where one could obtain collectibles. Augmented and Virtual reality is expected to disrupt the gaming industry.

AR and VR for Gaming Market Segment Analysis – By Application Type

Augmented & Virtual Reality will impact games in a sizeable way. Augmented Reality games have made their way to public places and several are location based, although virtual reality games will be restricted to certain areas such as homes, offices and parks, due to them being more immersive. In order to access games with Augmented & Virtual Reality, players may require headsets, motion-tracking sensors or their mobile phones with AR/VR compatibility. For those who use headsets, a PC with a high-end graphics processor will be necessary or a console. These games may offer non-VR and non-AR modes, for those who don't wish to purchase the technology at the present. The proliferation of AR and VR gaming across platforms is set to drive the market. AR games hold the major share of the market at 56.4% in 2020.

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AR and VR for Gaming Market Segment Analysis – By Geography

North America region holds the largest market share in the Artificial Intelligence in Gaming Market at 45% in 2020. However, APAC accounts for highest growth in the AR and VR Market in Gaming Industry. The Gaming industry of APAC is expected to grow at close to 26% CAGR due to rising number of gamers in the region, especially in China and India. Japan will continue to play a major role in the AR and VR market, especially for Mobile and Head Mounted Display segments. 

AR and VR for Gaming Market Drivers

AR and VR Amusement Parks and New Platforms

The market for AR and VR is moving from a purely consumer market to a more commercial segment. The costs of leveraging technology have allowed theme and amusement parks to keep one or two virtual rides in their park, however once the market reaches saturation, virtual reality parks may become a trend once the technology's availability is more feasible for park owners. More companies may begin devising applications specifically for park vendors. This new platform has led to increased demand for AR and VR in the gaming sector, outside of consumer applications.

Declining Prices of VR Headsets

One of the limiting factors of VR head mounted displays is the high cost. However in recent years the price has declined significantly. This is being exacerbated by the various industry developments. Companies such as NVIDIA, Oculus, AMD and Microsoft have formed a consortium to make virtual reality headsets affordable and accessible to more of the population. The potential drop in prices should increase purchases and these companies should reap the early benefits of the move. The formation of the consortium as well as general technological developments have driven prices down significantly.

AR and VR for Gaming Market Challenges

Lack of Awareness of AR Content

The biggest challenge with AR is the lack of awareness of AR content from consumers. AR and VR content can come in many forms, and this could be a cause for confusion. There's still not much clarity over whether consumers are aware these tools are available to them, or if they realize they're engaging with AR or VR when they use them. In a recent research study conducted by GWI in the UK and U.S., we found that over 90% of consumers in these markets are aware of VR, with around 65% saying they're aware of AR. Awareness of AR hovers between the 70-75% mark among the 16-44 age group, but drops dramatically among 45-54s (56%) and 55-64s (44%). By gender, males (71%) display a notably higher level of awareness of AR compared to women (59%). This has resulted in limited focus on the AR market.

Market Landscape

Product launches, acquisitions, and R&D activities are key strategies adopted by players in the AR and VR market. Niantic, Sony, Valve, Ubisoft, Next Games, Ludia Inc, Six To Start, esDot and various other companies are considered to be the key players of the AR and VR in gaming market. 

Acquisitions/Technology Launches/Partnerships

In June 2021, Facebook acquired VR Game developer BigBox VR for an undisclosed sum.

In June 2019 Niantic acquires Seismic Games and Escher Reality, in order to upgrade their AR offerings. There are games being offered with very similar elements, and the company is taking steps to innovate with potential features such as multiplayer or cross-platform. Competitors may already be testing these new features in games that have not been released.

Key Takeaways

AR and VR technologies have transformed the gaming industry in an unequivocally distinguished manner. Augmented and Virtual Reality is growing at a fast pace in a world which is predominantly driven by electronic devices such as mobile phones and tablets. 

Now that the AR and VR combination has raised expectations significantly, many gaming giants across the world such as NVIDIA and Sony are investing heavily in research and development of AR and VR technologies to reach those expectations. 

Increasing adoption of game design element has led companies to be more productive in terms of innovative technologies and software. This is considered to be the major driver of the market.

The growing availability of headsets that support the AR and VR technologies is expected to accelerate the growth during the forecast period.

The recently launched location based AR game -Pokemon GO became massive success overnight which has been downloaded over 80 million times within the first month of its launch.

Crowdfunding by start-ups to develop nascent applications and devices is now considered to be the major trend that stays for a while.

Related Reports:

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B. Serious Games Market

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