UK Extended Reality (XR) Market Report 2024
VR headsets occupy a discretionary tech purchase, and are less pivotal to consumers lives than computers and phones.
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EXECUTIVE SUMMARY
- Market dynamics and outlook
- Outlook for extended reality
- Opportunities for the VR and AR market
- Win the battle of imagination to demonstrate the utility of VR
- Aesthetics and technological breakthroughs can unlock AR’s potential
- For XR to become mainstream, seeing is believing
- Market dynamics and outlook
- Major price cuts of key devices help push overall volume, but value declines
- Graph 1: market size for consumer VR and AR headsets, 2013-24
- Premium headsets to come down in price, boosting accessibility
- VR headset ownership has struggled for growth in recent years
- Graph 2: ownership of VR headsets, 2018-24
- Technological advances will aid AR deployment and XR creation
- What consumers want and why
- Incremental increase in use of VR in the past year
- Graph 3: use of VR headsets, 2023, 2024
- AR use is static overall, but AI could unleash creativity
- Graph 4: use of AR 2023, 2024
- Interest in VR use cases varies across generations.
- Build VR into everyday routines to create more frequent engagement
- Graph 5: frequency of VR use, 2024
- Create interactive campaigns using AR for novel product launches
- Graph 6: frequency of AR use, 2024
- Interest in VR use cases fuelled by entertainment
- Graph 7: use case of VR consumers are interested in, 2024
- Gaming is the powerhouse driving AR interactions
- Graph 8: interest and use of AR functions, 2023
- Consumers are upbeat about VR’s promise
- Graph 9: [no title]
- Innovations and marketing trends
- Meta introduces more affordable Quest 3S and updated Ray-Bans
- Apple’s Vision Pro launches in the UK
- Sony announces potential Vision-pro competitor
- Google brings Android to XR
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MARKET DYNAMICS
- Market size
- The market for VR and AR headsets has struggled for growth in recent years
- Despite major price drops, VR headsets are still struggling for mainstream adoption
- Major price cuts of key devices help push overall volume, but value declines
- Graph 10: market size for consumer VR and AR headsets, 2013-24
- Market forecast
- Growth in volume sales boosted through innovation in design
- Premium headsets to come down in price, boosting accessibility
- Brands will need to focus on use cases to increase demand for headsets
- Discounting and lightweight alternatives can fuel incremental growth of the market
- Market drivers
- Consumers are still feeling the squeeze
- Graph 11: the financial sentiment index, 2016-24
- VR headset ownership has struggled for growth in recent years
- Graph 12: ownership of VR headsets, 2018-24
- Ultra fast networks will become commonplace in the next ten years to cope with increased data use
- Graph 13: average fixed broadband data use per month, 2013-23
- VR and AR will require greater broadband speeds and data allowances
- Holographic technology will refine AR experience in lightweight wearables
- Technological advances will aid XR creation and experience
- Immersive web will propel web based XR experiences
- Digital humans will provide new layers of customer interaction
- CGI and FOOH advertising can blur digital and physical realms
- Immersive experiences will also be driven by spatial audio and haptics
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WHAT CONSUMERS WANT AND WHY
- Use of XR technologies
- Incremental increase in use of VR in the past year
- Graph 14: use of VR headsets, 2023, 2024
- Over one in five have used a VR headset in the past 12 months
- Graph 15: use of VR headsets, by gender, 2024
- VR use dominated by younger consumers
- Graph 16: use of VR headsets by generation, 2024
- AR use is static overall, but AI could unleash creativity
- Graph 17: use of AR 2023, 2024
- Promote convenience of web based AR filters
- Graph 18: use of AR, 2024
- Explore AR filters in marketing to engage younger audiences
- Graph 19: use of AR technologies, by generation, 2024
- Younger women show greatest interest in using VR
- Holographic technologies in AR glasses will drive more natural experience
- Graph 20: interest in future use of AR and VR headsets, by age and gender, 2024
- Frequency of use of AR and VR
- VR shows signs of having a more dedicated user base
- Use not habitual
- Build VR into everyday routines to create more frequent engagement
- Graph 21: frequency of VR use, 2024
- Young Millennials embrace weekly VR experiences
- Create interactive campaigns using AR for novel product launches
- Graph 22: frequency of AR use, 2024
- Uses of VR and AR
- Interest in VR use cases fuelled by entertainment
- Graph 23: use case of VR consumers are interested in, 2024
- Tailor AR activations to resonate with the lifestyles interests of each gender
- Generational differences in VR aspects can drive appeal, especially among older audiences
- Graph 24: interest in VR use cases, by generation 2024
- Drive the sense of wonder and adventure to unleash VR’s appeal
- Highlight multi-functionality of VR headsets to appeal to consumers
- Graph 25: repertoire of VR functions used or interested in, 2024
- Gaming is the powerhouse driving AR interactions
- Graph 26: interest and use of AR functions, 2023
- Working age men set drive VR headset adoption
- Tourism and leisure can benefit from AR’s utility
- Tailor AR activations to resonate with the lifestyles interests of each gender
- Use cases and value of AR glasses will increase
- Build AR into daily life to cement promise
- Graph 27: repertoire of AR functions used or interested in, 2024
- Attitudes towards XR
- Consumers are upbeat about VR’s promise
- Graph 28: attitudes towards VR and AR, 2024
- Potential health upside of VR highest with consumers in high income households
- Health can be a driver of VR uptake
- Tackle drawbacks to VR to boost habitual use
- Graph 29: attitudes towards use of AR and VR, 2024
- Bring the noise: XR can unleash a trove of musical memories
- Graph 30: attitudes towards use of AR and VR in entertainment, 2024
- Boost family appeal with concerts using AR
- Tech bundles can enhance tech brands’ ecosystems
- Graph 31: attitudes towards use of AR and VR adoption, 2024
- Partnerships can boost exposure to XR
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INNOVATION AND MARKETING TRENDS
- Competitive strategies
- Meta introduces more affordable Quest 3S…
- Meta launches iterative upgrades to Meta Ray Ban range
- …And releases its vision for a post mobile world with Orion AR glasses
- Meta aims to bring front-row feel with VR concerts
- Apple’s Vision Pro launches in the UK…
- …and promotes all round capabilities of Vision Pro for work and pleasure
- Sony announces potential Vision-pro competitor
- Samsung to work with Google and Qualcomm on mixed reality platform
- Google brings Android to XR
- Google creates more developer tools in the XR space
- Launch activity and innovation
- VR opens up stories from the past and present
- Snap launches 5th generation spectacles
- Vive launches high end headset for enterprise and high end gaming
- EE takes XR to the streets
- Official Welsh Tourism Division Debut Metaverse Platform
- Snapchat introduces sponsored AR filters
- Advertising and marketing activity
- Further increase in advertising on VR headsets
- Graph 32: total above-the-line, online display and direct mail advertising on virtual reality headsets, 2019/20-23/24
- Meta’s flagship Quest 3 leads advertising spend
- Graph 33: total above-the-line, online display and direct mail advertising on virtual reality headsets, by brand, 2023/24
- Apple Vision Pro unleashes the sense of awe of a first timer
- Meta has looked to boost metaverse awareness with TV adverts
- John Lewis invoked adventure amongst its customers
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APPENDIX
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Abbreviations and terms cont.
- Nielsen Ad Intel coverage
- Methodology
- Consumer research methodology
- Market forecast data and methodology
- Forecast methodology
- Market forecast and prediction intervals (volume)
- Market forecast and prediction intervals (value)
VR headsets occupy a discretionary tech purchase, and are less pivotal to consumers lives than computers and phones. Financial pressures have softened demand for premium tech, prompting major brands in 2024 to cut prices on key headsets in response to the downturn.
The main threat to VR continues to be ongoing issues with usability and comfort with wearing headsets. Consumers do not want to wear them for prolonged periods. Aesthetically, AR aesthetic appeal is essential to achieve widespread adoption. Advances in technology aim to address these barriers, with newer, lightweight designs promising practical, everyday utility.
60% of consumers believe VR headsets will become mainstream, despite current ownership sitting at around 10%. This optimism highlights strong confidence in the industry’s future, offering VR manufacturers the opportunity to drive innovation and effectively communicate their advancements.
This report looks at the following areas:
- Analysis of the size of the AR and VR market and forecast for the next five years
- Key drivers influencing the long-term growth of the XR market including consumer financial confidence, technological advancements, and infrastructure development
- Competitive strategies of the main players in the XR market including launch activity and innovation and advertising activity of main brands
- Consumer usage, awareness and interest of VR and AR technologies and the opportunities for brands to drive adoption through innovation
- The frequency of use of AR and VR and strategies brands can deploy to increase engagement
- Attitudes towards XR, and the implications for brands in the manufacturing space and for companies looking to use the medium to connect with consumers
Price drops of leading VR headsets will see the market remain steady. Longer term technological advances and cosmetic changes will see AR headset ownership become more commonplace.
Joe Birch, Senior Technology and Leisure Analyst
Market Definitions
This Report examines the UK market for VR and AR, including consumer use and attitudes towards the technologies.
For the purposes of this Report, Mintel has used the following definitions:
Extended Reality (XR): Extended Reality refers to virtual, augmented and mixed reality technologies.
The metaverse: The definition of a metaverse is difficult to pin down and is hotly debated. It is typically regarded as a ‘persistent virtual world’. The ‘persistent’ part is important because it means a virtual space that can be accessed at any time by different people, and one that doesn’t disappear when you stop accessing it as is the case with traditional video games, for example. Metaverses can be accessed via virtual reality, augmented reality and devices such as smartphones and tablets. The ‘metaverse’ is not a single thing; rather, a number of different metaverses exist simultaneously.
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