The evolution from the early days of computers to our current era marks a noticeable shift towards more straightforward and engaging interactions with technology. This transformation has been particularly propelled by the rise of augmented and virtual reality (AR/VR) technologies, along with the profound impact of the COVID-19 pandemic, hastening the acceptance of digital realms and the concept of the metaverse.
As of 2021, the global immersive technology market reached a valuation of USD 21.66 billion, and projections indicate a substantial increase to approximately USD 134.18 billion by 2030. This signifies a robust compound annual growth rate (CAGR) of 22.46% from 2022 to 2030. Deloitte Global forecasts a remarkable 50% increase in the virtual reality market, predicting a revenue of US$ 7 billion globally in 2023, up from 2022’s US$ 4.7 billion.
These figures present a promising outlook for a continually expanding market, resilient even in the face of the recent COVID-19 pandemic. Notably, as a survey conducted in 2020 by McKinsey & Co. highlights, the global pandemic has accelerated the development and has encouraged the adoption of VR and AR technology, which facilitated the completion of activities previously only done in person. Companies have started to use these technologies more intensively because they allow daily working tasks to be performed remotely, while “offering endless possibilities for better learning, productivity and creativity outcomes in every way” .
The role of Europe
Looking at the European XR industry, it is anticipated to reach between €35 billion and €65 billion by 2025, with a gross added value ranging from €20 billion to €40 billion. This growth is expected to directly create employment for up to 860,000 people. The momentum in the VR/AR sector can be attributed to two key factors: the availability of advanced XR technologies, including more comfortable and affordable headsets, and the rising demand for enterprise XR solutions as businesses recognise their potential benefits.
The European Union has been a staunch supporter of digitalisation and XR technology development, evident through funding innovative digital research projects under the Horizon 2020 and Horizon Europe programs. Additionally, the European XR ecosystem thrives with events, initiatives, and associations like EuroXR, uniting national associations, individual members, and companies interested in XR. The EU’s overarching goal is to enhance digital literacy, transforming Europe into a thriving and highly competitive hub for XR activities.
However, recent geopolitical events, particularly the war in Ukraine, have left a significant impact on the immersive technology market. Sanctions and the withdrawal of companies from the Russian market, including <Microsoft’s suspension of HoloLens sales, have disrupted the AR landscape. The effects have rippled into the European market, with Central and Eastern European countries experiencing the most substantial consequences, given their slower and more price-sensitive AR market.
The trajectory of immersive technology, fuelled by advancements in XR technologies and the transformative influence of the COVID-19 pandemic, showcases a robust and continually expanding global market. Projections underscore the sector’s resilience and potential for substantial growth, with the European Union playing a pivotal role in fostering digital innovation and XR development.
Despite geopolitical challenges impacting the industry, the commitment to digital literacy and strategic support for XR activities position Europe as a competitive hub. As we navigate this dynamic landscape, it becomes evident that immersive technologies are not merely trends but integral components shaping the future of how we interact with and perceive the digital realm.
2 Lee P., Arkenberg C., Stanton B., Cook A., Will VR go from niche to mainstream? It all depends on compelling VR content, in Deloitte’s Technology,
Media and Telecommunications Predictions, 2023, p.71
3 https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology- tipping-point-and-transformed-business-forever#/
4 Globally Cool B.V., The European market potential for VR and AR services, 2021
5 World Economic Forum, Immersive Media Technologies: The Acceleration of Augmented and Virtual Reality in the Wake of COVID-19, 2022, p. 8
6 Ecorys, XR and its potential for Europe, 2021; Vigkos A., Bevacqua D., Turturro L., Kuehl S., The Virtual and Augmented Reality Industrial Coalition,