The short-term outlook for virtual (VR) and augmented reality (AR) may be a struggle, according to Strategy Analytics, but if organisations can ride out this wave then the future looks bright.

The findings appear in the analyst firm’s latest report, ‘Short and Long-Term Impacts of Covid-19 on the AR and VR Market.’ Among the report’s key takeaways are:

• XR hardware revenues will overtake $28 billion annually in 2025
• Total XR shipments – combined VR and dedicated AR headsets – will increase sixfold through 2025
• 2021 and 2022 will see a ‘slight comeback’ for smartphone-tethered VR headsets due to the rise of 5G networks

Strategy sees 2020 as ‘the year that the market for dedicated AR headsets [could have] really taken off’.

The Covid-19 pandemic forced more urgent priorities for organisations, chiefly around enabling remote working and bolstering cloud infrastructure. Yet this ‘new normal’ will help the AR and VR markets going forward, the analyst firm added.

“Covid-19 will have a significantly negative effect on the market for XR in 2020,” the company said in a note. “We anticipate both shipments and revenues declining by just over 20% y/o/y. We expect that the launch of smartphone-tethered AR headsets is likely to be pushed back to at least the very end of 2020, if not 2021, effectively delaying our earlier anticipated growth in a consumer market for dedicated AR devices by a year.”

One area of potential growth going forward is in lightweight, consumer-friendly AR headsets. Once smartphone-tethered devices reach the market, these devices will be commercialised, with Samsung and Nreal cited as leading the way.

Strategy added that fully immersive 3D environments are beginning to bear fruit in design, in particular engineering, automotive and architecture, as well as in training and education for VR devices. “We have raised our longer term forecast for XR hardware as a result of new work and life patterns in the new normal,” said David MacQueen, director of the virtual and augmented reality service at Strategy Analytics. “Work at home, training, education, and collaboration will all benefit from AR/VR.”

This is not the only analyst note arguing for cautious optimism. In December – albeit prior to the pandemic – CCS Insight posited that the VR and AR markets were volatile, but promising. The market for extended reality products was set to see a growth of 21% in 2019.

You can read the full Strategy Analytics report here (client access required).

Photo by Daoudi Aissa on Unsplash

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