AI in Virtual Reality Market Share & Growth | Forecast 2031

Report Description

The global artificial intelligence (AI) in virtual reality market size was USD XX Billion in 2022 and is likely to reach USD XX Billion by 2031, expanding at a CAGR of XX% during 2023–2031. The market is driven by the rising advancements in AI and the increasing use of virtual reality in entertainment, gaming, and others.

Rising adoption of artificial intelligence in consumer technology has an immense impact on the growth of the market. Virtual reality is advancing customer experience-based simulations not only for gaming and entertainment but also has vast applications in the automotive, healthcare, and retail industries. The use of AI minimizes the need for human intervention and makes the functioning of virtual reality devices seamless. Organizations are implementing this technology into service in various domains including marketing, designing, virtual training, assistance, engineering and maintenance, and simulation events. This, in turn, is projected to fuel the growth of the market during the projection period.

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• In April 2022, Nikon Corporation entered into a partnership with Microsoft Corporation for the designing and development of solutions related to 3D and virtual reality. This has been done in order to enrich the content creation space.

The integration of AI is proving to be a game-changer in the world of virtual reality and extended reality (XR). The benefits of this amalgamation are manifold, as it allows for better user interaction, leading to enhanced user experiences, and the possibility of augmenting human intelligence and senses. Additionally, it offers cost-effectiveness in creating an immersive virtual world, bringing down the expenses that would otherwise be incurred. All of these factors are expected to boost the adoption of AI in VR solutions, thereby, driving the market growth during the projection period.

The research report finds that the COVID-19 pandemic impeded artificial intelligence in virtual reality market. The lockdown imposed by various governments all around the world disrupted the supply chain and distribution activities. This impacted the manufacturing and production of components, equipment, and devices related to the virtual reality setup. Although, the market is growing steadily, with the normalization of the COVID-19 scenario and advancement in AI in recent years.

Artificial Intelligence (AI) in Virtual Reality Market Dynamics

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Major Drivers

Rising trend of live virtual entertainment is expected to drive the market during the projection period. There is a growing inclination among people for at-home entertainment using modern technology to view live events and shows. The implementation of artificial intelligence helps individuals get a lag-free and hyper-realistic virtual experience of live music concerts, live events, and sports. The increasing craze among people for such experiences is anticipated to propel the market during the forecast period.

• In April 2022, the famous rock music band, Foo Fighters, performed their event using the virtual stage of Meta. The videos were live-streamed over the Meta Quest headsets, providing an immersive 180-degree view.

Existing Restraints

High risk of cybersecurity threats is projected to impede the market during the projection period. Virtual platforms often have a high degree of vulnerability towards cyber-attacks that are intended to disrupt the functioning and extract vital information. Hackers constantly develop new and innovative approaches to find loopholes within the functioning of virtual platforms and exploit those weaknesses for money and information from unsuspecting customers. This can potentially lead to a decline in the use of virtual reality platforms, despite the implementation of AI.

Emerging Opportunities

Increasing options for personalization in virtual reality devices and platforms are anticipated to provide immense growth opportunities for artificial intelligence in virtual reality market. The integration of AI and implementation of machine learning technology with virtual reality raises the bar even further, and provides a large variety of customization options for various purposes, including everything from gaming to holding business meetings. In business, the use of AI helps in creating customizable templates based on the customer’s unique requirement by effectively utilizing the available customer data, such as demographics, browsing habits, and purchase history. This helps in boosting revenue and customer engagement.

Scope of the Artificial Intelligence (AI) in Virtual Reality Market Report

The market report includes an assessment of the market trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Artificial Intelligence (AI) in Virtual Reality Market Segment Insights

Component Segment Analysis

Based on component, artificial intelligence in virtual reality market is divided into software, hardware, and content. The hardware segment is projected to hold the major share of the market during the projection period, due to the large investments being made by several companies for the development of advanced hardware components as it plays the key role in running hyper-realistic software. Better hardware helps in the creation of a high-quality VR setup, comprising a stereo sound system, a stereoscopic head-mounted display that delivers distinct imagery for each eye), and sensors for tracking head motion, that are made using magnetometers, gyroscopes, structured light systems, or accelerometers.

The software segment is expected to experience strong growth during the forecast period. This growth is driven by the increasing requirements for hi-tech virtual reality technology. VR software is in great demand in multiple applications, including gaming, entertainment, live events, business meetings, and seminars. Seamless functioning of software is one of the primary requirements and the incorporation of AI makes it possible for the software not only to run effortlessly but also provide better customization options, security, and ease of usage.

Device Segment Analysis

On the basis of device, the global market is segregated into VR simulators, VR glasses, head-mounted displays, treadmills & haptic gloves, and others. The head-mounted displays segment is projected to register a high CAGR during the forecast period. These displays provide an immensely immersive experience and are also available in cost-effective variants, such as cardboard-based virtual reality headsets by Google. The head-mounted displays (HMDs) are being increasingly used in marketing, aviation, training, and entertainment industries as they aid in speeding up the workflow and prove to be highly cost-effective in comparison to the real-world-based experience. For instance,

• In April 2021, the European Union Aviation Safety Agency certified Vajro and VRM Switzerland to hold virtual sessions of pilot training. The simulator is equipped with Varjo’s latest virtual reality headset Varjo XR-3, which has a human-eye resolution and is run using special technology used in Swiss flight training.

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Technology Segment Analysis

On the basis of technology, artificial intelligence in virtual reality market is segmented into machine learning, computer vision, context-aware computing, natural language processing, and others. The machine learning segment is projected to hold a substantial share of the market, owing to its extensive implementation in virtual reality solutions to enhance the interactions and overall user experience.

ML is used for gesture recognition and enables the VR systems to accurately interpret and respond to the user’s movements, thereby creating a highly immersive experience. The rising adaptation of virtual reality is likely to propel the growth of this segment, owing to the enhancing effect it has on VR technology.

Application Segment Analysis

Based on the application, artificial intelligence in virtual reality market is segregated into object recognition, tracking, customization, and others. The object recognition segment is projected to register a considerable CAGR during the forecast period as it leverages AI to significantly enhance the immersive experience of virtual reality. It helps in identifying and understanding real-world objects and uses AI to seamlessly integrate them into the virtual environment. It helps the users to interact with physical objects and surroundings while being in the virtual world. With the increase of realism in virtual reality technology, this segment is projected to experience substantial growth in the coming years.

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End-user Segment Analysis

Based on the end-user, the market is divided into gaming and entertainment, aerospace, defense, automotive, healthcare, education, retail, manufacturing, and others. The gaming & entertainment segment is expected to generate a major revenue share of the market, as several companies are making rigorous investments in the development of hardware, software, and content for gaming purposes.

The gaming industry is booming and there has been a sharp inclination of consumers towards mobile and computer-based games. The use of VR setups powered by AI is anticipated to propel this segment even further, as has been evident in recent years.

• As per a survey report published in August 2023, the gaming sector of the media market is projected to have an increment of close to 35% between the years 2023 and 2027. This growth is estimated to be equivalent to an amount of USD 136.8 billion.

The healthcare segment is projected to witness a massive adoption of VR technology in the near future, owing to the thriving implementation of virtual reality and artificial intelligence in healthcare. VR facilitates a controlled visual environment that is proving to be highly effective.
The use of AI makes it easier to use VR for training medical professionals as well as in diagnosing and treating patients. Furthermore, virtual reality technology is being increasingly used to assist autistic patients, in better understanding Alzheimer’s disease, and detecting visual impairment. The growing application of VR and AI in healthcare is likely to provide a substantial boost to the segment.

Regional Outlook

In terms of region, the global artificial intelligence (AI) in virtual reality market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America is expected to dominate the market during the projection period, due to the highly advanced technological infrastructure in this region. The region has a strong presence of market players who are global leaders in the field of AI and virtual reality.

A large number of tech startups that provide services related to VR and AI are entering the US market, providing solutions specific to various industries. Furthermore, the US government is also heavily investing in AI-based virtual reality technology to train its soldiers and officials using virtual, mixed, and augmented reality training sessions.

The market in Asia Pacific is projected to have substantial growth during the projection period, owing to the presence of several emerging economies and increasing disposable income. The region is witnessing a large demand for immersive technologies with the rapid development of 5G network infrastructure. Major countries in the region such as India and China have shown great interest in this field and are working towards the development of artificial intelligence in virtual reality technology.

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