AR & VR - Europe

Europe

In Europe, revenue in the AR & VR market market is projected to reach €9.4bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.51%, resulting in a projected market volume of €14.8bn by 2029.
The largest market within this market in Europe is VR Hardware, which will have a market volume of €3.0bn in 2024.
Although most revenue is generated the United States, in Europe is expected to contribute significantly with a projected market volume of €10,110.0m in 2024.
In the AR & VR market market, the number of users in Europe is expected to amount to 486.5m users by 2029.
User penetration will be 59.4% in 2024 and is expected to reach 62.1% by 2029.
The average revenue per user (ARPU) in Europe is expected to amount to €20.1.
In Europe, the AR & VR market is witnessing a surge in innovative applications within the healthcare sector, particularly in Germany's medical training and rehabilitation programs.

Definition:

Augmented reality (AR) and virtual reality (VR) make it possible to combine the real and virtual worlds. AR is generally accessed via mobile phones and primarily relies on lenses. AR effects can be created by using lenses in social media apps, for example. AR is also used for displaying digital 3D objects in our surroundings, e.g., in gaming or eCommerce apps. Meanwhile, VR technology allows users to dive into the virtual world, and, unlike AR technology, it requires a headset device which enables the creation of virtual worlds.

Structure:

The AR & VR market consists of six different markets: AR Advertising, AR Hardware, AR Software, VR Advertising, VR Hardware, and VR Software. AR Advertising covers mobile advertising that is displayed in the most prominent social media apps. AR Hardware comprises AR headsets and glasses. AR Software is divided into three different application types, namely social media, gaming, and eCommerce applications, which can be accessed via the most prominent app stores. VR Advertising covers in-game advertising as well as advertising in VR videos. VR Hardware comprises both tethered head-mounted displays (HMDs) and stand-alone HMD headsets. Lastly, VR Software covers VR games and VR videos, which require headsets.

Additional information:

The market comprises revenues, users, average revenue per user, and penetration rates. Revenues are generated through in-app purchases, advertising spending, and consumer spending on apps, games, and hardware such as headsets or glasses. Sales channel data shows both online and offline revenues, which include VAT. The market only displays B2C revenues and users for the above-mentioned markets and markets; B2B and B2G revenues are not included. Additional definitions for each market can be found on the respective market pages.
Market numbers for VR headsets are also featured in the Consumer Market Insights, namely in the Gaming Equipment market of the Consumer Electronics market. Unlike the VR Hardware market in the Advertising & Media Outlook, the Gaming Equipment market also covers smartphone VR devices.
Key players in the market include companies such as Meta (Oculus VR), Microsoft (HoloLens), Snap Inc. with different lenses, and Nvidia, which offers computing hardware components.
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Analyst Opinion

The AR & VR market in Europe has been experiencing significant growth in recent years, driven by customer preferences for immersive experiences and the increasing adoption of these technologies across various industries.

Customer preferences: Customers in Europe are increasingly seeking immersive experiences that go beyond traditional forms of entertainment and communication. AR and VR technologies offer the ability to transport users to different worlds, enhance gaming experiences, and provide interactive and engaging content. This has led to a growing demand for AR and VR devices, applications, and content in the region.

Trends in the market: One of the key trends in the AR & VR market in Europe is the adoption of these technologies in the gaming industry. Europe has a strong gaming culture, and the integration of AR and VR technologies has revolutionized the gaming experience. The demand for AR and VR gaming devices and content has been steadily increasing, with developers and manufacturers focusing on creating more immersive and realistic gaming experiences. Another trend in the market is the use of AR and VR technologies in the healthcare sector. Europe has a well-developed healthcare system, and the adoption of these technologies has the potential to improve patient care and medical training. AR and VR applications are being used for surgical simulations, medical education, and rehabilitation purposes. The healthcare industry in Europe is recognizing the benefits of these technologies and investing in their implementation.

Local special circumstances: Europe is home to several leading AR and VR companies and research institutions, which has contributed to the growth of the market in the region. Countries like Germany, France, and the United Kingdom have a strong presence in the AR and VR industry, with companies developing innovative technologies and solutions. This has created a favorable environment for the growth of the market, as these companies drive advancements and attract investments. Furthermore, Europe has a large and tech-savvy population, which has contributed to the increasing adoption of AR and VR technologies. The region has a high smartphone penetration rate, making it easier for users to access AR and VR applications and content. Additionally, European consumers are known for their willingness to embrace new technologies, which has further fueled the demand for AR and VR devices and experiences.

Underlying macroeconomic factors: The growth of the AR & VR market in Europe is also influenced by macroeconomic factors such as economic stability and government support. Europe has a stable economy, which provides a conducive environment for businesses to invest in AR and VR technologies. Additionally, governments in the region are recognizing the potential of these technologies and are providing support through funding and favorable policies. This has encouraged companies to innovate and expand their presence in the market. In conclusion, the AR & VR market in Europe is experiencing significant growth due to customer preferences for immersive experiences, the adoption of these technologies in various industries, the presence of leading companies and research institutions, a tech-savvy population, and supportive macroeconomic factors. The market is expected to continue growing as advancements in technology and content creation further enhance the AR and VR experience.

Methodology

Data coverage:

The data encompasses B2C enterprises. Figures are based on the AR & VR market. AR and VR enable consumers to experience a new dimension, using either a headset or installed units, as they combine the real and virtual worlds. Consumer revenue figures refer to revenues relating to AR hardware, AR software, VR hardware, VR software, and spending on AR and VR advertising. Both digital and non-digital revenues are included.

Modeling approach / Market size:

Market sizes are determined through a top-down approach, building on specific predefined factors for each market market. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and industry associations, as well as third-party studies and reports. In addition, we use relevant key market indicators and data from country-specific associations, such as consumer spending, internet penetration, 4G coverage, and historical developments. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption. The main drivers are level of digitalization, adoption of technology, GDP per capita, and internet penetration.

Additional notes:

The market is updated twice a year in case market dynamics change. The data is modeled using current exchange rates. The impact of the COVID-19 pandemic and the Russia-Ukraine war are considered at a country-specific level. In some cases, the data is updated on an ad hoc basis (e.g., when new, relevant data has been released or significant changes within the market have an impact on the projected development).