Extended Reality (XR) Industry Trends and Future 2024

10 min read January 19, 2023

Author: Alex Dzyuba, Lucid Reality Labs Founder & CEO

2024 can be considered one of the most challenging years that brought us more lockdowns, traveling restrictions, and supply chain disruptions, all resulting in a significant economic impact; with all that, it still managed to get us quite a considerable amount of remarkable and exciting news from the realm of technology and Extended Reality (XR) in particular.

For innovation, standing at the frontline of many tech giants, SMEs, institutions, and industries agendas, we have witnessed a significant leap towards XR, with companies utilizing its power to overcome many of the challenges we have faced. Requiring new ways of interaction, many trends have found rapid adaptation, from the need for remote collaboration and the creation of hybrid workplaces to the advancement of remote education and hybrid events.

We tend to forget how entwined some technology can become in our everyday lives. With the six-hour October outage of Meta social media platforms, Facebook, Instagram, and WhatsApp, companies and individuals could have felt a social or economic impact. Connecting nearly 3 billion users worldwide, social media today is an essential pillar of our communication. Thinking forward, the social media outage was a reminder of how important it is to connect and how much we rely on technology.

The XR market will continue its rapid expansion, expected to reach USD 125.2 billion by 2026, accelerated by the surging adaptation of technology in education, healthcare, military, industrial, and entertainment sectors. The rising numbers of XR devices coming to the market are opening new opportunities for collaboration and content creation. This technology is capable of delivering a significant number of advantages, from cost reduction and rapid outcome improvement to completely reshaping education and cooperation.

Much more will be possible with the advancement of the XR industry, where we have witnessed several remarkable milestones this year. Amongst these, quite a few have served as the turning points shaping the future of how we perceive reality and interact with it. Today, we would like to look back at these milestones that have made headlines in 2021 and are bound to shape the XR market, trends, and industry of 2023 and beyond.

Microsoft Mesh & Hybrid Workspaces

This year has accelerated XR software advancement for future remote collaboration systems development, with tech giants setting the stage for more elaborate hybrid platforms, like Microsoft Mesh, launched in March 2021. A Hybrid platform will allow collaboration between users who are working on location and the ones working remotely, with both parties feeling physically present, enabling immersive presence and photorealistic holoportation into a shared experience. As we continue to move towards remote existence, with both Gartner and Deloitte predicting a more significant fraction of workers becoming remote in the upcoming years, there are still several concerns that arise with remote work, like employees struggling with unplugging after work, loneliness, and collaboration challenges, to name a few.

The potential lies in leveraging XR to solve them; as the technology behind Hybrid platforms advances, we can step closer to tools that allow for equal presence, be it physical or remote. Thus, more companies could allow their employees to select whether they wish to work on location or from home without having to undergo several disadvantages of working remotely. This could have a positive impact on the distributed workforce as XR could help enhance and make remote work more effective, economically reasonable, comfortable, and safe for both the employer and employee, keeping peers connected.

Extended Reality Hardware

The XR hardware, without doubt, has to be one of the significant milestones this year, with so many new devices launched throughout the year, Varjo Aero, Nreal Air, Pico Neo 3, and HTC VIVE Flow amongst the latest. Hardware producers constantly strive to increase the visual fidelity and field of view (FOV) amongst other functional capabilities to achieve an even better experience for the headset’s users. The market is providing more and more opportunities for developers to take the XR experiences to an entirely new level, helping realize much more complex projects with advanced functionality and a great variety of immersive interactions and scenarios.

That said, we are promised even more advanced hardware to be launched in 2022, including Oculus Quest 3 Project Cambria, Magic Leap 2, Hololens 3, Apple MR, and many more. We could soon be approaching a phase where the device mark will become oversaturated with hardware. We are already at the point where it is required to make the focus shift towards content creation. This will require a rapid increase in knowledge and technology stack for all developers working to expand the limits of XR possibilities, as well as the number of agile specialists capable of honing and utilizing new skills in a rapidly growing environment.

Next Generation Haptics

Haptics technology allows them to extend their sense of presence in immersive environments by enabling them to transmit and comprehend information through touch. The technology allows for the simulation of tactile perception as well as serves to provide haptic feedback to communicate with the user. With the advancement of XR technology, haptics has accelerated its implementation by providing users with the possibility to have an even deeper immersion into an experience, providing them with what we would consider a sensation when touching someone or something.

Several wearable haptic technologies have already been developed that allow the enhanced XR experiences, from haptic suits like Tesla, haptic gloves like Meta and HaptX, Touch haptic controller (for Healthcare or other solutions that require high accuracy of movements), Ultraleap mid-air haptics technology or some that are on the way like haptic socks patented by Apple. Even though the technology is not new, its constant advancement enables users to experience a more realistic sense of touch, taking the XR experience of any industry to an entirely new level, allowing the users to submerge and interact with virtual environments as if they were happening in real life. Looking ahead, haptics will be one of the technologies that will allow us to create experiences that will help users explore and navigate through, sense, and touch artificial environments on an entirely new level.

Enterprise Use Of Extended Reality

Enterprise and tech giants often dictate the direction entire industries will stir in; 2021 was no exception. Microsoft won an estimated $21.88 billion contract to supply the US Army with 120,000 Hololens-based headsets or ByteDance, Tiktok’s parent company, acquisition of Pico Interactive, the Chinese VR headset producer—Magic Leap’s change of focus towards enterprise, rebranding, and $500 million investment round announcement. As Salesforce closed the $28 billion Slack purchase deal with the ambition to turn this software into the next-generation collaboration platform and Accenture’s purchase of 60,000 Oculus headsets to train recruits, we can see an amplified interest in XR technology from different industries.

At the same time, there is clear evidence that Meta, former Facebook, has shifted its focus towards XR for consumers as it has decided to discontinue the Oculus for Business production by January 1, 2022.

The ongoing pandemic has impacted the adaptation of XR technology, primarily due to its capability to connect users worldwide and provide opportunities for much-needed remote collaboration. We will see more large-scale purchases and transformations in the upcoming years, with a growing number of users worldwide. This could only mean that XR technology will become increasingly relied on as part of our everyday business and private activities.

Magic Leap

Image Source: Magic Leap

The Coming of The Metaverse

In October 2021, Meta, former Facebook, in their founder’s letter, shared Mark Zuckerberg’s announcement of the next chapter of the internet and their ambition to bring the Metaverse to the general public. Now rebranded as Meta to reflect the strategic direction of its portfolio, the company is moving forward with building a fully integrated collaboration universe where people can work, meet, play, interact, and much more.

The one question at that point was whether Meta would be the one to bring this dream to life and create an ultimate space that would provide an unprecedented feeling of presence in a virtual universe or will the ambition be ultimately picked up by another tech giant? This announcement, without a doubt, has caused a major uproar for many worldwide, with many tech companies having to comprehend and adjust to this crucial milestone rapidly. Following the Meta news, significant technology players, like Niantic with Lightship AR, Qualcomm with Spaces XR Platform, and Microsoft with Teams, announced their coming into the Metaverse race. And let’s not forget Google, one of the pioneers in AR technology, is now also attempting to gain a foothold in creating the Metaverse.

On another note, when speaking about the Metaverse, we cannot miss to mention the hottest buzzwords of 2021, the NFTs and the Web3. Non-fungible tokens, or NFTs, are unique data units stored on a blockchain that prove asset possession and ownership. Web3, sometimes called WEB 3.0, is the next version or generation of the internet, the decentralized web based on blockchain tech and digital tokens idea. That said, we can already see the acceleration in these two directions, with companies outside the tech realm starting to invest in NFTs and Web3, like Nike’s recent acquisition of the NFT collectibles studio RTFKT. We are bound to see more non-tech companies from FMCG, fashion, media, real estate, and more domains investing in NFT software, assets, and creators to be competitive in the upcoming Metaverse.

Even though the Metaverse is an exciting concept that can grant its users ultimate access to a completely different level of existence and collaboration, there are still quite a few challenges that must be solved before it can become a part of our everyday reality.

Future Extended Reality Trends

While thinking about the past year, it is always good to consider what lies ahead and which trends will be shaping the present 2023 XR. With all the milestones, we can see the tendency of brands to adopt more immersive technology. While industries from fashion to retail and real estate will be heavily investing in Web3 and NFTs, which have taken the market by storm, more and more companies will explore the possibilities of the Metaverse.

In the following year, 5G will finally be able to showcase its practical implementation and the benefits high-speed internet can deliver while operating in the Metaverse, raising the need for consumers to switch and creating opportunities for telecom operators. However, we are still bound to see more network outages as the infrastructure is not quite ready.

XR hardware giants like Apple will start to have an even more significant impact. With the launch of the Apple MR glasses, users can get a new device in their own iOS ecosystem. Finally, Meta will get a strong competitor on XR for the consumer market, accelerating the digital transformation even more. This resulted in the need for more content development, leading to content creators’ shortage. This will ultimately bring us to the point where the fight for tech talent will become more apparent.

Last but not least is the further acceleration of XR technology in Healthcare, which remains a pioneer and early adopter of immersive technology, continuing to hold its leading position.

Image Source: Antonio De Rosa

In Conclusion

As we are looking back and lifting the curtain to 2023, it is becoming more evident that XR is bound to entwine itself more into both enterprise and consumer activities. The pace at which companies adapt to it will dictate and impact which businesses will be able to have in the XR future of operations.

For more information on how Extended Reality can be integrated and advance business and user experiences, see our portfolio or contact us.