Defense XR market is anticipated to grow at a CAGR of 32.8% during the forecast period. The overall growth of the market is mainly driven by rapid technological advancements in AR, VR, and MR technology, growing applications, and collaborations between end-users and market players mainly in the military. Additionally, with growing application, the industry has seen significant spike in investments from major technology market players, investors, government organizations among others which is as major factor contributing to growth of the market. For instance, in March 2022, Qualcomm launched the $100 million Snapdragon Metaverse Fund which is aimed at helping XR developers and companies building the foundational technologies and content ecosystem to enable the metaverse. 

Segmental Outlook 

The global defense XR market is segmented by technology type, end-user, and application. By technology type, the market is sub-segmented into VR, AR, and MR. Based on end-user, the market is sub-segmented into private and government. Based on the application, the market is sub-segmented into mission planning and analysis, training and simulation, maintenance and repairs, and other applications such as medical treatment, and R&D. Among applications, the demand for XR is growing significantly for training and simulation mainly due to its capacity to improve training efficacy, cost-effectiveness, and overall military readiness. Additionally offers immersive and realistic environments similar to actual combat situations allowing military personnel to engage in critical training exercises and improve their skills within a secure and controlled environment. Additionally, XR offers the creation of diverse and dynamic training scenarios, enabling soldiers to practice a broad spectrum of mission-critical tasks and decision-making processes. By integrating XR into military training, the dependence on live exercises is reduced, which helps to mitigate associated risks and expenses. Also, it helps collaborate for joint exercises for geographically dispersed units, providing a more interconnected and versatile training approach. Considering its advantages, military organizations globally are increasingly adopting XR technologies as a part of their military strategies. For instance, in November 2023, HGXR integrated its XR platform with advanced training tools, including a simulated M4 carbine, replicating weapons used by the German army.

Government End-Users Contribute the Highest to the Global Defense XR Industry

Among end-users, the government sector contributes the highest to the global defense XR market. In government, XR is used for multiple applications such as training and simulation to improve situational awareness and operational readiness for military personnel, intelligence gathering by indoor navigation to get more accurate information, operating military vehicles remotely such as unmanned aerial vehicles (UAV), and drones among others helping military organizations to improve operational efficiency and reduce risk. With growing use cases, governments globally are increasingly adopting XR technologies as a part of their defense modernization strategies. With growing demand technological advancements and collaboration between government and market players are growing significantly, contributing to the growth of the defense XR market. For instance, in August 2023, Varjo, a professional-grade XR hardware and software provider, announced that it had been selected to provide head-mounted display (HMD) technology for the US Army’s Reconfigurable Virtual Collective Trainer (RVCT) Air Program. According to Varjo, the Air program is centered around providing a portable training capability for three different Helicopters: Apache, Chinook & Blackhawk, and is part of the US Army’s efforts to create a synthetic training environment (STE) that can be utilized regardless of location.

Regional Outlook

The global defense XR market is further segmented based on geography including North America (the US, and Canada), Europe (UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia), and the Rest of the World (the Middle East & Africa, and Latin America). Among regions, the Asia-Pacific region is the fastest growing market for the global defense XR market. Major economies in the region such as India, China, and Japan are increasingly focusing on technological advancements in their military. Additionally, the growing overall defense budget of major economies mainly due to geopolitical tensions, and the growing regional XR industry is further contributing to the overall growth of the market. In January 2023, the Indian army adopted VR technology as a part of their military modernization strategy. The technology is to be used by army personnel deployed along the line of control (LOC) in Jammu’s Rajouri sector for area familiarization, and surveillance on enemy’s infiltration routes. 

Global Defense XR Market Growth, by Region 2024-2031

The North America Accounts Highest Share in the Global Defense XR Market

Among the regions, North America is the largest market for the global defense XR market owing to factors such as growing defense budget and focus on the adoption of advanced technologies, the presence of major market players such as Microsoft Corp., Meta, and Lockheed Martin among others. With growing geopolitical tensions, the regional governments are increasingly focusing on collaborating with market players for technology integration, and R&D. For instance, in September 2023, the US Department of Defense announced the award of a $90.0 million contract to HTX Labs, for the delivery of VR content to be used by the US Air Force for training purposes. Additionally, major market players are also collaborating for portfolio expansion, and new product development. For instance, in May 2023, Lockheed Martin partnered with KAI and Red 6 Aerospace on an AR Pilot Training System. According to the company, through the partnership, Fort Worth-based Lockheed Martin Aerospace will bring the Red 6 Airborne Tactical Augmented Reality System into the TF-50 aircraft and variants, which it has developed with Korea Aerospace Industries.

Market Players Outlook

The major companies serving the global defense XR market are BAE Systems plc, Leonardo DRS, Safran SA, and Harris Corporation among others. The market players are increasingly focusing on technological developments for business expansion and growth. For instance, in May 2022, Bala Aatral Solutions, a startup based in Chennai that specializes in the gaming industry, secured grants amounting to $360 thousand from the Ministry of Defense (MoD) through the Innovations for Defense Excellence (IDEX) platform. The funding is allocated to support the development of innovative technologies. As per the guidelines set by the MoD, the grants will be utilized for the creation of an AR/VR solution tailored for airplane mechanics and a VR-based training simulator designed for helicopter pilots. The project is expected to be completed within two years.

The Report Covers

• Market value data analysis of 2023 and forecast to 2031.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the defense XR market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying ‘who-stands-where’ in the market.