What is the real market size of the XR market in 2026?
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In our XR market deck, you will find everything you need to understand the market
The XR market stands at a critical inflection point in January 2026.
Meta's overwhelming dominance has created a subsidy-dependent ecosystem, while smart glasses emerged as the breakout category with triple-digit growth.
And if you want to better understand this new industry, you can download our pitch covering the XR market.
Insights
- Meta's Reality Labs has burned through $60 billion in cumulative losses since 2020, creating barriers to entry that forced Microsoft and Google to largely retreat from the headset market.
- VR household penetration reached 13% in the United States, positioning the technology precisely at the threshold between early adopters and early majority according to Rogers' diffusion model.
- Smart glasses shipments grew 210% year-over-year in 2024, with Ray-Ban Meta exceeding 2 million units sold, making it the only XR category achieving mainstream velocity.
- The Quest Store generated over $2 billion in cumulative revenue, with one in three paid apps earning millions, demonstrating viable economics for quality content creators despite platform concentration.
- Apple Vision Pro saw its app count decline 25% from peak to roughly 1,900 apps by early 2025, with only 10 new apps added in September versus hundreds monthly at launch.
- Enterprise VR training delivers 75% to 80% knowledge retention compared to just 5% for traditional lectures, with companies reporting 30% to 70% cost savings when adopting XR solutions.
- Research firm estimates for the 2026 XR market span a 33x range from $7.55 billion to $253.50 billion, driven entirely by whether analysts include smartphone AR and metaverse platforms or strictly head-worn devices.
- Healthcare is the fastest-growing XR segment at 33.9% annual growth rate, while gaming remains the largest revenue category at 32% to 39% of the total XR market.
- Asia-Pacific leads growth projections at 35% to 42% annual rates through 2030, with China designating XR among future industries and launching over 100 VR projects in 2024.
How do we define the XR market?
We define the XR market as all head-worn devices that blend digital content with the real or virtual world, plus the software and services built specifically for those devices.
We include virtual reality headsets, mixed reality and augmented reality headsets or glasses, their app stores and content, and associated enterprise software and support services.
We exclude smartphone or tablet-only AR experiences, flat-screen metaverse platforms, core semiconductor and component revenues, and general-purpose PCs or consoles used to run XR content.
We also use this definition when we make and update our pitch covering everything there is to know about the XR market
In our XR market deck, we will give you useful market maps and grids
What is the size of the XR market in 2026?
What results can we find on the internet?
As you probably know already, many firms regularly publish (sometimes conflicting) estimates of the XR market size, using different definitions, scopes, and years.
We have consolidated their results here. We will use it, among other things, to derive a single, reasonable estimate of the market size.
| Research Firm | Market Size | Year | Market Definition |
|---|---|---|---|
| Mordor Intelligence | $7.55B | 2025 | Narrower than our definition with stronger enterprise focus. Excludes significant consumer hardware and software revenue streams. |
| MarketsandMarkets | $37.94B | 2025 | Closely aligned with our definition including head-worn devices and associated software. Covers both consumer and enterprise segments comprehensively. |
| Statista | $46.6B | 2025 | Business-to-consumer segment only, excludes enterprise revenue. Narrower than our definition which includes both B2C and B2B. |
| Grand View Research | ~$150B | 2025 | Broader than our definition, includes mobile AR experiences. Encompasses smartphone-based augmented reality which we explicitly exclude. |
| Fortune Business Insights | $253.50B | 2025 | Significantly broader, includes metaverse platforms and broader ecosystem. Far exceeds our head-worn device and direct software focus. |
What can we conclude, then?
The estimates aligned with our definition cluster between $25 billion and $50 billion for 2026.
Estimates below $10 billion focus too narrowly on enterprise segments, while those above $150 billion include smartphone AR and metaverse platforms we explicitly exclude.
Based on this data, we estimate the XR market is worth approximately $35 billion to $45 billion in 2026, though we will refine this further with bottom-up calculations.
In our XR market deck, we have collected signals proving this market is hot right now
What if we try to make our own estimate?
We don't have to rely only on external analyses to estimate market size.
We will try to build a first-principles, bottom-up calculation, then run a few sanity checks to see whether we can reliably estimate the size of the XR market.
Useful data about the XR market
Here is some useful and reliable data we have collected, they will help us estimate the size of the XR market:
- Global AR and VR headset shipments reached 14.3 million units in 2025 (IDC)
- Meta Quest devices represent 74.6% of all headset shipments in 2024 (IDC)
- The Quest Store generated over $2 billion in cumulative consumer spending through early 2025 (Meta)
- Apple Vision Pro shipped between 370,000 and 420,000 units in its first year at $3,499 (AppleInsider)
- Smart glasses shipments exceeded 2 million units in 2024, growing 210% year-over-year (UploadVR)
- VR enterprise training market reached $4 billion to $12 billion in 2024 (Global Growth Insights)
- Average selling price for VR headsets ranges from $299 for Quest 3S to $3,499 for Vision Pro (IDC)
- 171 million VR users exist globally as of 2024 (G2)
- Enterprise and commercial segments expected to represent 60% of VR revenue by 2030 (Mordor Intelligence)
- Hardware represents 53% to 67% of total XR market revenue in 2025 (Mordor Intelligence)
Method and calculation to get the size of the XR market
We start with hardware shipments of 14.3 million headsets in 2025. This number comes from IDC's comprehensive tracking data.
The average selling price varies dramatically by device category. Meta Quest devices at $299 to $499 dominate volume, while Apple Vision Pro at $3,499 drives revenue despite low unit sales.
We calculate a blended average selling price of approximately $550 across all headset categories. This accounts for Meta's 74.6% share at lower prices, plus premium devices from Apple, Sony, and others.
Headset hardware revenue equals 14.3 million units multiplied by $550 average price, yielding roughly $7.9 billion. Smart glasses add another $600 million to $800 million at 2 million units and $300 to $400 average price.
Total hardware reaches approximately $8.5 billion to $9 billion in 2026. Hardware represents 53% to 67% of the total XR market according to our sources.
If hardware is 60% of the market (midpoint estimate), total market size equals $8.7 billion divided by 0.60, which gives us $14.5 billion. This seems too low compared to external estimates.
We need to account for the installed base, not just new shipments. With 171 million global VR users, annual software spending of $50 to $200 per user generates $8.6 billion to $34 billion.
Enterprise software and services add substantial revenue beyond consumer spending. The VR enterprise training market alone contributes $4 billion to $12 billion annually.
Combining hardware ($8.5 billion to $9 billion), consumer software ($10 billion to $15 billion), and enterprise ($8 billion to $12 billion) yields a total market of $26.5 billion to $36 billion. This aligns well with our top-down estimate.
Sanity checks
The Quest Store alone generated over $2 billion cumulative through early 2025. Annual run rate suggests $600 million to $800 million per year from Meta's ecosystem alone.
PlayStation VR, SteamVR, and Apple's visionOS add additional software revenue streams. Combined consumer software likely exceeds $2 billion annually across all platforms.
Enterprise spending per employee ranges from $1,000 to $10,000 annually versus $50 to $200 for consumers. This 20x to 50x multiplier explains why enterprise represents growing share despite smaller user base.
With 65% of Fortune 500 companies deploying VR training, enterprise market size of $8 billion to $12 billion appears reasonable. Over 300 large companies spending $25 million to $40 million each reaches this range.
Our calculated range of $26.5 billion to $36 billion sits comfortably within external estimates clustering at $25 billion to $50 billion. The logic holds across multiple validation approaches.
What's our final guess then?
Based on our analysis, the XR market is worth approximately $32 billion in 2026. This figure reflects head-worn devices plus associated software and services as defined.
Our estimate sits between MarketsandMarkets' $37.94 billion and Mordor Intelligence's $7.55 billion, which makes sense given their definitional differences. We fall in the middle of aligned estimates.
To put this in context, the XR market in 2026 is roughly the same size as the global bicycle market ($32 billion) or the global pet food market ($35 billion). These comparisons help validate our estimate.
The XR market is smaller than the video game console market ($55 billion) but larger than the e-reader market ($18 billion). This positioning reflects XR's status between niche and mainstream adoption.
Hardware accounts for roughly $9 billion, consumer software approximately $11 billion, and enterprise software and services around $12 billion. This breakdown aligns with the 53% to 67% hardware share reported by research firms.
In our XR market deck, we provide the data and the context to understand it
Is the XR market mature, competitive, fragmented?
The maturity score of the XR market in 2026 is 35/100
The XR market remains in early growth stages despite decades of development cycles. VR household penetration reached only 13% in the United States, sitting right at the threshold between early adopters and early majority.
Product categories are still being defined, with smart glasses emerging as a breakout segment only in 2024. The technology has survived four major hype cycles over 35 years without achieving mainstream status.
Enterprise adoption is accelerating faster than consumer uptake, with 91% of businesses planning XR deployment. However, actual implementation remains limited to specific use cases like training and design visualization.
The market lacks standardization across platforms, with incompatible app stores and hardware ecosystems. This fragmentation indicates early-stage market dynamics rather than mature industry consolidation.
The competitive score of the XR market in 2026 is 25/100
Meta's 74.6% market share represents one of the most dominant positions in modern technology markets. The company has effectively created a subsidy-dependent ecosystem through $60 billion in cumulative losses.
Major competitors have retreated or struggled significantly. Microsoft discontinued HoloLens, Google abandoned Glass Enterprise, and Sony's PSVR2 commitment is wavering amid declining shipments.
Apple Vision Pro shipped only 370,000 to 420,000 units despite significant marketing investment. The top five vendors control 91.5% of the headset market, creating oligopoly conditions.
Barriers to entry are extraordinarily high, requiring advanced optics, massive content investment, and sustained losses. No credible new entrants have emerged in headsets, making this one of the least competitive tech markets.
The fragmentation score of the XR market in 2026 is 20/100
The XR market shows extreme concentration rather than fragmentation. Meta alone controls nearly three-quarters of headset shipments, with the next four vendors combining for less than 20% share.
Software revenue is similarly concentrated, with the Quest Store dominating consumer spending at over $2 billion cumulative. Apple's visionOS and Sony's PlayStation VR represent the only other significant consumer platforms.
Enterprise software shows slightly more fragmentation, with PTC Vuforia, TeamViewer, and multiple training platforms competing. However, consolidation is occurring through acquisitions like TeamViewer's purchase of Ubimax and Upskill.
Geographic concentration is also notable, with North America generating 34% to 42% of revenue. The market structure resembles a monopoly with peripheral competitors rather than a fragmented industry.
How much bigger will the XR market be in 10 years?
What are the different forecasts for the growth rate of XR market?
One more time, let's check what other market research firms have to say.
| Research Firm | Annual Growth | Until Year | Comment |
|---|---|---|---|
| Mordor Intelligence | 42.4% | 2030 | Enterprise-focused definition aligns well with our scope. This represents the high end of credible estimates. We will use this for optimistic scenarios. |
| IDC | 38.6% | 2029 | Hardware and services focus matches our definition precisely. Strong historical accuracy gives this estimate high credibility. We weight this heavily in our analysis. |
| Precedence Research | 32.9% | 2034 | Full XR market including some broader elements. The longer timeframe provides useful long-term perspective. We adjust slightly downward for our narrower definition. |
| Grand View Research | 32.9% | 2030 | Includes mobile AR which inflates growth projections. We discount this estimate given definitional mismatch. Useful as upper bound reference. |
| Fortune Business Insights | 30.4% | 2032 | Broadest definition including metaverse platforms. Growth likely overstated for our specific scope. We use this for baseline scenarios. |
| MarketsandMarkets | 28.3% | 2029 | Hardware and software focus aligns perfectly with our definition. Conservative estimate reflects execution risks. We weight this in realistic scenarios. |
| Statista | 10.3% | 2030 | Business-to-consumer only, excludes faster-growing enterprise segment. Significantly understates total market growth. We exclude this from our projections. |
What can we conclude about the growth rate of the XR market?
The most credible estimates cluster between 28% and 38% annual growth through 2030. We project the XR market will grow at approximately 32% CAGR from 2026 through 2036.
This growth rate reflects Meta's continued platform investment, accelerating enterprise adoption, and the emergence of smart glasses as a mainstream category. Healthcare and training applications drive enterprise growth at the high end.
At 32% annual growth, the XR market would be worth approximately $160 billion by 2030. This represents a 5x increase from our 2026 baseline of $32 billion over four years.
Looking ahead to 2036, the XR market could reach $550 billion to $650 billion at sustained 32% growth. This represents a 17x to 20x expansion from today's market size over the next decade.
For context, the smartphone market grew at roughly 25% CAGR during its 2007 to 2015 explosion phase. Our 32% projection for XR assumes similar mainstream crossover dynamics beginning around 2026 to 2028.
The gaming console market grew at just 8% CAGR over the past decade, reaching $55 billion. XR's faster growth reflects broader applications beyond gaming, particularly in enterprise training and productivity.
By 2030, the XR market at $160 billion would be roughly the size of today's global toy market ($180 billion). By 2036 at $600 billion, XR would approach the current global luxury goods market ($650 billion).
These projections assume Meta maintains platform leadership, Apple commits to Vision Pro iteration, and enterprise adoption follows current trajectories. A major platform failure or regulatory intervention could reduce growth to 20% to 25% range.
And if you're curious about what's happening in this (really interesting) market, we publish a quarterly update on the activity in the XR market here. We also have a monthly update here.
In our XR market deck, we answer all the common questions from investors and entrepreneurs
What is the projected CAGR for the XR market?
At New Market Pitch, we like it when the information is clear and easy to digest, as you will see in the pitch about the XR market. That's also why we have made this clear summary table.
| Year | Worst Case (20% annual growth) | Realistic (32% annual growth) | Best Case (42% annual growth) |
|---|---|---|---|
| 2027 | $38.4B | $42.2B | $45.4B |
| 2028 | $46.1B | $55.7B | $64.5B |
| 2029 | $55.3B | $73.5B | $91.6B |
| 2030 | $66.4B | $97.0B | $130.1B |
| 2031 | $79.7B | $128.0B | $184.7B |
| 2032 | $95.6B | $169.0B | $262.3B |
| 2033 | $114.7B | $223.1B | $372.5B |
| 2034 | $137.7B | $294.5B | $528.9B |
| 2035 | $165.2B | $388.7B | $751.0B |
| 2036 | $198.2B | $513.1B | $1,066.4B |
What would it take for the XR market to be worth $1.1 trillion?
Reaching $1.1 trillion by 2036 requires XR to achieve true mainstream consumer adoption beyond current early adopter demographics. Household penetration would need to reach 40% to 50% in developed markets, up from just 13% today.
Apple would need to launch a successful $1,500 to $2,000 Vision device that sells 10 million to 15 million units annually. This mid-tier product would bridge the gap between Quest's accessibility and Vision Pro's premium positioning.
Smart glasses must evolve into genuine AR displays, not just camera-equipped frames. Ray-Ban Meta's success shows demand for wearable tech, but prescription AR glasses with navigation and notifications could reach 50 million annual shipments.
Enterprise adoption needs to expand beyond training into daily productivity workflows. If XR becomes standard equipment for 100 million knowledge workers at $2,000 to $5,000 per seat, enterprise revenue alone reaches $200 billion to $500 billion.
Gaming cannot remain the dominant consumer use case. Social connection, fitness, education, and remote work must each generate $50 billion to $100 billion in annual software and services revenue.
Platform competition must intensify rather than consolidate further. A healthy ecosystem needs three to four major platforms with 15% to 30% market share each, preventing the monopolistic dynamics that limit innovation today.
Content economics need fundamental restructuring. The Quest Store's $2 billion cumulative revenue over multiple years is insufficient. Monthly active users must spend $15 to $25 per month, matching mobile game monetization levels.
China's domestic market must fully develop, contributing $300 billion to $400 billion by 2036. Government support through provincial grants and infrastructure investment could accelerate adoption beyond current Western-centric dynamics.
In our XR market deck, we track adoption trends and shifts in consumer behavior
Where is the money in the XR market?
What are the categories and how much do they generate?
Hardware currently dominates the XR market, generating approximately 60% of total revenue or $19 billion in 2026. This includes VR headsets, AR glasses, and smart glasses across consumer and enterprise segments.
Consumer software and content represents roughly 25% of the market at $8 billion. This category includes Quest Store purchases, SteamVR games, and visionOS applications, with gaming accounting for most spending.
Enterprise software and services captures the remaining 15% at approximately $5 billion in 2026. Training applications, industrial design tools, and healthcare solutions drive this segment with much higher per-user revenue than consumer.
Within hardware, VR headsets generate about $8 billion to $9 billion annually. Smart glasses add $600 million to $800 million, while high-end mixed reality devices like Vision Pro contribute $1.3 billion to $1.5 billion despite low volumes.
Gaming dominates consumer software at roughly 70% of the $8 billion segment, or $5.6 billion. Social applications and fitness content combine for another $1.5 billion, with productivity and education splitting the remaining $900 million.
Enterprise spending concentrates in training and simulation at $3 billion to $4 billion annually. Design and engineering applications generate $800 million to $1.2 billion, while healthcare and surgical planning adds $400 million to $600 million.
How will it evolve?
By 2030, hardware's share will decline to approximately 50% of total revenue as software and services mature. The XR market at $160 billion would see hardware at $80 billion, consumer software at $48 billion, and enterprise at $32 billion.
Enterprise software and services will grow fastest, reaching 20% of total market by 2030 and potentially 30% by 2036. Corporate training budgets shifting from in-person to VR drive this acceleration with proven ROI metrics.
Looking ahead to 2036 in the realistic scenario at $513 billion total, hardware might represent just 40% at $205 billion. Consumer software could reach 35% at $180 billion, with enterprise commanding 25% at $128 billion.
Gaming's dominance within consumer software will decrease from 70% today to perhaps 50% by 2030 and 40% by 2036. Social, fitness, productivity, and education applications will capture growing share as use cases diversify.
Smart glasses could evolve into a $40 billion to $60 billion hardware category by 2036, rivaling traditional VR headsets. This assumes true AR displays become viable at $400 to $800 price points with mainstream aesthetics.
Enterprise hardware will shift from dedicated headsets to dual-purpose devices. By 2036, workers might use the same XR device for training, design work, and personal entertainment, blurring category boundaries.
Where to spend your energy as an investor or a builder in the XR market then?
Investors should focus on enterprise software companies with demonstrated ROI in training and simulation. These businesses can charge $1,000 to $10,000 per employee annually versus $50 to $200 for consumer apps, creating superior unit economics.
Smart glasses represent the highest-growth hardware opportunity, with 210% annual growth in 2024 suggesting a category on the verge of mainstream adoption. Companies enabling the transition from simple cameras to true AR displays merit attention.
For builders, the Quest platform remains the only proven path to millions in revenue despite Meta's dominance. One in three paid apps earn millions, and the installed base continues growing even as competition struggles.
Healthcare and surgical training applications offer premium pricing and recession resistance that gaming cannot match. Medical institutions will pay $50,000 to $200,000 for specialized training software with proven patient outcome improvements.
Avoid building for Apple Vision Pro unless you have unique access or capabilities. The 25% developer exodus and stagnant app counts signal a platform struggling to achieve critical mass despite Apple's brand strength.
Social VR experiences with strong network effects deserve attention, as Gorilla Tag's 1 million daily active users demonstrates. Multiplayer engagement drives retention far beyond single-player content, creating defensible moats.
And if you're curious about where investors are putting their money right now, we publish a quarterly update on the fundraising activity in the XR market here. We also analyze long-term funding trends in the XR market here.
In our XR market deck, we have designed useful charts to give you full market clarity
What is the geographical revenue breakdown for the XR market?
North America
North America generates approximately 38% of XR market revenue in 2026, or roughly $12 billion. The United States accounts for most of this with Meta, Apple, and Microsoft headquarters driving both development and adoption.
Enterprise adoption is most mature in North America, with 65% of Fortune 500 companies deploying VR training programs. This corporate spending commands premium pricing and drives the region's revenue share above its population percentage.
By 2030, North America's share will decline slightly to 35% of a $160 billion market, or $56 billion. Faster growth in Asia-Pacific and increasing maturity in Europe will reduce relative concentration despite absolute growth.
Looking to 2036, North America might represent 30% of the XR market at $154 billion in the realistic scenario. The region will remain the innovation center but lose market share as global adoption accelerates.
Asia-Pacific
Asia-Pacific captures roughly 32% of XR revenue in 2026, approximately $10 billion. China's government designation of XR as a future industry and over 100 VR projects launched in 2024 signal aggressive development.
Manufacturing applications in China, Japan, and South Korea drive enterprise adoption at rates exceeding Western markets. Japan's advanced 5G infrastructure enables mobile XR experiences that complement head-worn devices.
By 2030, Asia-Pacific will likely lead all regions at 40% market share, generating $64 billion from a $160 billion global market. Annual growth rates of 35% to 42% will push the region past North America.
By 2036, Asia-Pacific could command 45% of the XR market at $231 billion. China's domestic market alone might reach $120 billion to $140 billion as consumer adoption follows government infrastructure investment.
Europe
Europe represents about 20% of the XR market in 2026, generating roughly $6.4 billion in revenue. Germany, United Kingdom, and France account for 63% of regional adoption, led by automotive and industrial training applications.
European enterprise adoption focuses heavily on manufacturing and automotive sectors. Companies like Volkswagen, BMW, and Airbus deploy VR for design visualization and assembly training, driving B2B revenue concentration.
By 2030, Europe's share will hold steady at approximately 20% of the market, reaching $32 billion. Regulatory frameworks like GDPR slow consumer adoption but create opportunities in privacy-focused enterprise applications.
Looking to 2036, Europe might maintain its 20% share at roughly $103 billion in the realistic scenario. Strong industrial base and workplace safety regulations will sustain enterprise demand even if consumer uptake lags.
Latin America
Latin America generates about 6% of XR revenue in 2026, approximately $1.9 billion. Brazil and Mexico lead adoption, primarily in education and training sectors where XR delivers measurable cost savings.
Price sensitivity limits consumer hardware adoption, but enterprise deployment in mining, oil and gas, and medical training grows rapidly. Companies achieve 30% to 70% training cost reductions that justify investment despite economic volatility.
By 2030, Latin America could reach 7% of the XR market at $11.2 billion. Government initiatives in education and workforce development will drive adoption as device prices decrease.
By 2036, the region might capture 8% market share at $41 billion. Growing middle class and improving internet infrastructure will enable consumer adoption beyond current enterprise focus.
Middle East and Africa
Middle East and Africa combine for roughly 4% of XR revenue in 2026, about $1.3 billion. UAE and Saudi Arabia lead through government smart city initiatives and Vision 2030 economic diversification programs.
Healthcare and education drive adoption in markets where XR can address infrastructure gaps. Remote surgical training and distance learning applications deliver value beyond entertainment in regions with distributed populations.
By 2030, the region could grow to 5% of the global market at $8 billion. Continued government investment in technology infrastructure and education will support above-average growth rates.
Looking to 2036, Middle East and Africa might reach 6% at $31 billion in the realistic scenario. Africa's young population and mobile-first technology adoption could enable leapfrogging traditional computing paradigms.
In our XR market deck, we focus on making things as clear as possible
Related blog posts
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- What is the latest update in the XR market?
