Middle East and North Africa Virtual Reality Market

Overview

Middle East and North Africa Virtual Reality Market reached US$ 564.2 million in 2023 and is expected to reach US$ 1448.0 million by 2031, growing with a CAGR of 12.5% during the forecast period 2024-2031.

Strong government backing has been the key towards market growth in middle east. Saudi Arabia and UAE have even adopted VR development into their official economic development blueprints. In 2022, UAE unveiled its metaverse strategy, aiming to break into the top 10 countries globally for VR technologies and creating US$ 4 billion in market value over the next five years.

The future growth of the MENA virtual reality market could be hampered by a challenging security environment. From the ongoing war with Hamas in Israel to the deteriorating situation in Yemen, a volatile security environment could lead to the fleeing of tech companies to more secure locations including U.S and Singapore.

Dynamics

Ongoing Induction of Fifth Generation Fighter Jets

The leading countries in the middle east are beginning to induct fifth generation fighter jets to augment their air power. Israel has already inducted nearly 39 Lockheed Martin F-35 Lightning II fighter jets out of a total of 75 that it had ordered under a security pact with U.S. However, other military powers such as Saudi Arabia and UAE are also looking to acquire fifth generation fighters.

After a deal to purchase F-35 fighter jets from U.S. fell through, UAE requested to join South Korea's KF-21 fighter jet development program in September 2023. Similarly, Saudi Arabia is also entering into negotiations with UK and Japan to join the future development of combat jets. Fifth generation fighters use VR-based helmet-mounted displays (HMDs) to provide complete 360 degree situational awareness for the fighter pilot. Over the medium and long term, the use of VR for military pilot training will increase significantly in the middle east.

Deployment of New Training Methods

With the ongoing drive to diversify away from the oil and gas industry, middle eastern governments are focusing on developing education and medical tourism sectors due to their high growth potential. Both the emerging sectors are rapidly deploying VR-based learning tools for advanced educational training applications.

For instance, Unimersiv, a UAE-based VR startup has deployed its interactive VR-based learning tools in international schools across the middle east. Munfarid, a Bahraini startup specializing in technological teaching solutions has partnered with Unimersiv to further expand the applications for VR-based educational training tools. The deployment of new training methods will augment the demand for VR solutions and services during the forecast period.

Lopsided Nature of VR Industry Development

Like other emerging high-tech industries in the middle east, the largest chunk of development is concentrated in UAE and Israel. Apart from generous government support, some of the other factors in favor of the industry development include relatively open societies, ease of movement for talented foreign workers as well as a developed local entertainment and tourism industry.

Comprehensive development of the VR industry hasn't yet occurred in other middle eastern countries, namely Saudi Arabia, Qatar, Bahrain and Oman, although Saudi Arabia is rapidly working towards the same under its Vision 2031 policy. The lopsided development of the VR industry in the middle east will likely create significant hindrances for market growth in the future.

Segment Analysis

The Middle East and North Africa virtual reality market is segmented based on technology, offering, device, application and country.

Middle East is Expected to Become a Major Hub for VR Software Development

The post-pandemic period has witnessed an upsurge of new VR software startups based out of UAE and Israel. Currently, most of these startups are engaged in fine-tuning and enhancing existing mobile apps and software suites for use with VR technology. Furthermore, some niche startups are also working on developing specialized VR-optimized software suites for upcoming applications.

VR hardware manufacturing hasn't yet taken off in the middle east, despite substantial investment by various venture capital funds. Countries such as Israel have developed specialized VR hardware for military and civilian applications, however, they are yet to experience mass commercialization.

Geographical Penetration

Mushrooming of New Startups Puts Israel in the Lead Position

The Israeli government has promoted the tech industry as a core component of its economic development policy. The government provides generous funding for new startups in the form of grants and subsidies. Furthermore, it also facilitates collaborative partnerships between the tech industry and academia. Given its high-quality human capital and integration into U.S. tech ecosystem, Israel remains the primary choice for new entrepreneurs to set up a VR focused startup.

One of the primary objectives of Israeli VR startups is to develop dual-use technologies that can also be used for military and defense applications. For instance, Combatica is an Israeli startup that has developed an integrated VR headset and system to help combat training simulations of the Israeli ground forces.

Despite an economic crisis caused by the currently ongoing war in Gaza, the industry still continues to attract investors. For instance, in January 2024, Google invested US$ 8 million into several new Israeli VR startups. Although UAE has also attracted significant talent and resources towards its VR industry, it is yet to catch up with Israel's level of development.

COVID-19 Impact Analysis

The COVID-19 pandemic created challenges as well as opportunities for the MENA virtual reality (VR) market. The pandemic led to a surge in demand for cloud-based VR solutions, as many end-users migrated to remote work to ensure business continuity. Many emerging startups in the sector found it difficult to raise capital due to the prevalent economic situation. However, some state-backed investment funds, such as Abu Dhabi's Mubadala Investment Company continued making investments in the VR industry.

The post-pandemic period has led to a surge in investments into the sector, with most of the benefits accruing to UAE and Israel. However, other richer nations including Saudi Arabia, Qatar and Bahrain, have also started formulating policies to attract and develop a local VR industry.

Russia-Ukraine War Impact Analysis

The Russia-Ukraine war has not had a direct major impact on the MENA virtual reality market. On the contrary, the market stands to benefit, mainly due to the exodus of talented workforce from Russia and Ukraine. Many Russian and Ukrainian tech entrepreneurs relocated to Israel along with their VR tech startups to protect themselves from the fallout of international sanctions on Russia.

Furthermore, a sizeable cohort of Russian programmers and software engineers also migrated to Dubai in the aftermath of the war due to its proximity and burgeoning tech industry. A steady influx of talented human capital would be hugely beneficial for the long term growth of the middle east and African virtual reality (VR) market.

By Technology

• Non-Immersive
• Semi-Immersive
• Fully Immersive

By Offering

• Hardware
  • Sensors
  • Semiconductor Components
  • Displays & Cameras
  • Position Trackers
  • Optics
  • Others
• Software
  • Software Development Kits
  • Cloud-based Services
  • VR Content Creation

By Device

• Head-Mounted Displays (HMDs)
• Gesture-tracking Devices
• Projectors and Display Walls

By Application

• Consumer
• Commercial
• Enterprise
• Healthcare
• Aerospace & Defense
• Others

By Country

• Saudi Arabia
• UAE
• Oman
• Bahrain
• Qatar
• Kuwait
• Egypt
• Iran
• Iraq
• Israel
• Rest of Middle East and North Africa

Key Developments

• In October 2023, XRHealth, an Israeli startup focusing on the development of VR-based health solutions, distributed 30 VR headsets to treatment centers across Israel in wake of the Hamas terrorist attacks.
• In January 2024, UAE government announced plans to legalize and regulate mental health counseling therapy administered through VR tools.
• In February 2024, Saudi Arabia's Ministry of Investment launched a US$ 250 million fund to support the development of a local VR and deep tech industry.

Competitive Landscape

The major global players in the market include Lumus, Mantis Vision Ltd., ByondXR, InceptionXR Inc, Varvision, HumanEyes, Tekrevol, Sigma Software, Appikr Labs and Beyond Universe X-Reality Solutions.

Why Purchase the Report?

• To visualize the MENA virtual reality market segmentation based on technology, offering, device, application and country, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of virtual reality market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as excel consisting of key products of all the major players.

The Middle East and North Africa virtual reality market report would provide approximately 45 tables, 40 figures and 157 Pages.

Target Audience 2024

• Edtech Companies
• Defense Equipment Manufacturers
• Government Agencies
• Industry Investors/Investment Bankers
• Research Professionals