The Augmented Reality (AR) and Virtual Reality (VR) market has recorded more than US$2 billion in total investment so far in 2020. According to a new report from global tech market advisory firm ABI Research, more than US$1.3 billion for AR and VR company funding and more than US$500 million spending for M&A deals has taken place across enterprise and consumer markets, and across hardware, software, and services.

“Covid-19 and the rise of the remote economy generated new needs and trends for consumers and businesses, driving funding and M&A deals in areas such as AR/VR (remote) healthcare, entertainment at home, and virtual collaboration tools,” explains Eleftheria Kouri, Research Analyst at ABI Research. “At the same time, despite the economic uncertainty, the number of company and project failures was significantly less than previous years, indicating that the market continues to mature, and the technology sector was not dramatically affected from COVID-19 crisis. Also, the major driver factor behind M&A deals and funding is market footprint expansion and solution improvement to better meet higher demand and stand out of the competition, instead of company rescue investments.”

In the AR market, hardware proved to be an important and appealing investment point in 2020, especially consumer hardware as that market continues to ramp up. MAD Gaze, Nreal, Mira, Magic Leap, and North (acquired by Google), are among a selection of AR/MR smart glass manufacturers that received significant funding in 2020. In the VR market, media and entertainment and gaming studios such as Thirdverse and Survios saw success, as did VR healthcare players OssoVR and Oxford VR, specialized in training.

Software was not forgotten though, with some notable series funding occurring in the year. While not technically funding or M&A, Unity’s US$1.3 billion IPO showcased the importance of a capable content creation platform. Enterprise platform provider Librestream, AR software provider Augmedics, collaboration platform Spatial, and AR marketing creation platform Poplar, all saw funding rounds over US$1 million in 2020. Apple was active in software and platform acquisition as well, with VR collaboration platform Spaces and VR content house NextVR.

“Undoubtedly, M&A deals and funding levels in AR/VR market saw disruption due to the COVID-19 pandemic, especially during Q2 2020 as in many other industries. However, in Q3 and Q4 funding activity increased due to better visibility of the market and better understanding/evaluation of the value that AR/VR solutions can generate. M&A activity is an indicator of a healthy and growing market, used as a method of value creation and footprint expansion that assists business both to recover and remain competitive during economic downtimes, as well as expand capability and addressable market going forward,” Concludes Kouri.

These findings are from ABI Research’s Augmented and Virtual Reality: Investments, Acquisitions, and Market Trends for 2020 report. This report is part of the company’s Augmented and Virtual Reality research service, which includes research, data, and ABI Insights.