AR & VR in Defense Market Size (2025-2030)

The AR & VR in Defense Market was valued at USD 1.04 billion in 2024 and is projected to reach a market size of USD 2.41 billion by the end of 2030. Over the forecast period of 2025-2030, the market is projected to grow at a CAGR of 15%.

Augmented reality (AR) and virtual reality (VR) technologies are transforming defense operations through immersive simulation and enhanced situational awareness. AR overlays digital information on a real-world environment, while VR creates a fully simulated landscape for training and mission planning. Defense agencies use these devices to improve decision-making, reduce operational risks, and speed up learning. The AR aids in battlefield visualization, equipment maintenance, and strategic coordination. VR helps in pilot support training, combat simulation, and distance cooperation. These technologies reduce costs by replacing physical drills with virtual exercises. They also improve security by simulating a high-risk environment. Integration with AI and sensor data increases realism and accountability. AR and VR systems are now embedded in head-mounted displays, smart glasses, and command interfaces. Defense contractors and governments invest in these devices to modernize forces and improve readiness. The market includes services to support hardware, software, and defense needs. Applications of the AR and VR systems expand air, land, and naval operations. AR and VR also support cybersecurity training and strategic planning. Its role in defense modernization is rapidly expanding. These technologies are now essential for next-generation defense strategies. AR and VR offer scalable, adaptive, and secure solutions for global defense forces, with evolving threats.

Key Market Insights:

• Kopin Secures $7.5 Million Contract for AR Helmet-Mounted Display Systems Supporting Aircraft Pilots.
• Over 60% of AR & VR defense applications are focused on simulation and training, helping reduce live drill costs and improve soldier readiness.
• Around 42% of AR & VR hardware used in defense consists of helmet-mounted displays, driven by demand for real-time battlefield visualization and pilot interfaces.
• Global user penetration for AR & VR technologies is expected to reach 54.1% by 2025, with defense contributing a growing share through immersive training and planning tools
• Almost 29% of defense cybersecurity programs now include VR-based simulations to prepare personnel for digital threat scenarios.
• Over 35% of AR software used in defense is now integrated with AI for predictive analytics, mission planning, and real-time decision support.

Market Drivers:

The rising demand for advanced training solutions is primarily driving the AR & VR in the Defense Market.

Defense organizations are adopting AR and VR to improve training efficiency and reduce costs. These technologies simulate realistic fighter landscapes without physical risk. Soldiers, pilots, and technicians gain experience on the job in controlled environments. AR and VR reduce expensive equipment and dependence on live drills. They accelerate learning and improve retention. The training module can be updated quickly to reflect new threats. Remote training is also possible, which supports global deployment. Defense agencies value virtual training flexibility and scalability. Immersive training becomes necessary, with the mission becoming more complicated. This demand increases investment in AR and VR systems.

The need for enhanced situational awareness is driving the AR & VR in the Defense Market.

AR and VR improve real-time decision-making in defense operations. AR overlays strategic data on a live environment, which helps the commanders visualize threats and assets. VR enables mission rehearsals and area analysis before deployment. These devices increase coordination in units and platforms. The sensor allows dynamic updates during operational integration. AR supports maintenance by guiding technicians through complex processes. VR helps to simulate cyber-attacks and electronic war scenarios. Defense forces use these devices to react rapidly and more accurately. AR and VR become critical for operational success, with increasing battlefield complexity.

Market Restraints and Challenges:

The AR and VR systems require significant investment in hardware, software, and skilled personnel. Defense-grade solutions should meet strict security and reliability standards. Integration with heritage systems is often complex and time-consuming. Issues of compatibility can delay deployment and increase costs. Adaptation of AR and VR systems for specific missions adds further customization costs. Training personnel are required to operate and maintain these systems. Small defense agencies can struggle to justify costs. The implementation faces technical and logical obstacles without proper plan. These challenges slow down the market and limit scalability in defense areas.

Market Opportunities:

The simulation-based mission planning is a major opportunity for AR and VR in defense. These devices allow forces to rehearse operations in a virtual environment. Commanders can test strategies, assess risks, and refine the strategy before deployment. AR enhances the plan by visualizing the terrain and logistics. VR supports the allied team in remote collaboration. These reduce simulation errors and improve coordination. They also support joint exercises between concerned forces. Simulation tools provide customized and cost-effective plans for emerging global threats. Defense agencies seek scalable solutions for complex missions. This demand creates strong growth potential for AR and VR providers.

AR & VR IN DEFENSE MARKET REPORT COVERAGE:

AR & VR in Defense Market Segmentation:

AR & VR in Defense Market Segmentation By Component:

• Hardware
• Services
• Software

Hardware is the largest component in the AR and VR defense market. This includes head-mounted displays, smart glass, sensors, and simulation rigs. Defense forces rely on physical devices that provide an immersive experience. These devices are used in pilot training, battlefield visualization, and equipment handling. Hardware ensures realism and precision in simulation. It supports real-time data overlay and motion tracking. High investment in advanced gear drives this segment. Military agencies prefer rugged and reliable equipment. Hardware forms the foundation of the AR & VR system.

Services are growing fastest in the AR and VR defense market. Defense agencies seek specialist assistance for system integration, training, and maintenance. Managed services reduce the burden on internal teams. Provider offers customized solutions for various missions. Remote support and update systems improve performance. Training-as-a-Service models are gaining popularity. Services also include cybersecurity and compliance support. The demand for efficient service providers is increasing with the increasing complication in the AR and VR operations. Outsourcing helps agencies stay agile and cost-effective. The need for scalable and reliable services fuels rapid growth in this segment.

AR & VR in Defense Market Segmentation By Technology:

• Augmented Reality (AR)
• Virtual Reality (VR)
• Mixed Reality (MR)
• Extended Reality (XR)

Augmented reality is the largest technology segment in the AR and VR defense market. It overlays digital data on the real-world environment. AR helps soldiers visualize threats, terrain, and mission details in real time. It supports equipment maintenance with guided instructions. AR improves decision-making during operations. Defense forces use AR in smart glass and helmet displays. It enhances warfare awareness and strategic coordination. AR is also used in logistics and remote support. Its integration with sensors and AI enhances performance. Comprehensive application of AR in air, land, and naval forces makes it a major section.

Virtual reality is the fastest-growing technology segment in the AR and VR defense market. It creates an immersive environment for training and simulation. Soldiers rehearsed mission in safe, controlled virtual places. VR reduces the physical practice and requirement of equipment. It improves learning speed and retention. Defense agencies use VR for combat simulation and mission planning. Technology supports remote cooperation and joint exercises. VR platforms are becoming more inexpensive and accessible. Progress in graphics and motion tracking increases realism. VR adoption is faster with evolving training. Its flexibility and effectiveness grow rapidly in defense areas.

AR & VR in Defense Market Segmentation By Application

• Combat Simulation
• Equipment Maintenance
• Mission Planning and Rehearsal
• Intelligence and Surveillance Training
• Others

Combat simulation is the largest application in the AR and VR defense market. This helps soldiers to train for real-world landscapes without risk. The simulation includes battlefield strategy, arms handling, and emergency response. VR and AR create a realistic environment for mission rehearsals. These devices improve readiness and reduce training costs. Defense agencies use simulation to test strategies and assess performance. Combat drills are safe and efficiently repeated. Technology supports joint exercise and cross-force coordination. Its role in preparing soldiers for complex missions makes it a major application. Combat simulation is the top priority for military training.

Mission planning and rehearsal is the fastest-growing application in the AR and VR defense market. AR and VR help commanders to visualize the terrain, logistics, and threats. The team cooperates in a virtual environment to refine the strategies. It provides real-time updates, improves coordination, and reduces errors. MR tools support dynamic planning across units. Simulation allows testing of several scenarios before deployment. This reduces the risk and improves mission results. Defense agencies value the flexibility and accuracy of the virtual scheme. As the operations are becoming more complicated, the demand for an immersive planning tool is also increasing.

AR & VR in Defense Market Segmentation: Regional Analysis:

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa

North America is the largest regional market for the AR and VR defense market. America leads the adoption due to strong military investment. Defense agencies use immersive techniques for training and operations. Advanced infrastructure supports wide deployment. Local sellers provide state-of-the-art solutions. Government funding accelerates innovation and integration. North America also has high cybersecurity standards. The attention of this region on modernization is more demanding of advanced technologies. AR and VR are embedded in defense strategies and purchase plans. Continuous investment ensures that North America remains a major market.

Asia-Pacific is the fastest growing region in the AR and VR defense market. Countries like China, India, and South Korea are investing in defense technology. Growing geopolitical stress demands advanced training equipment. AR and VR help to modernize forces and improve readiness. Regional governments support digital changes in defense. Local startups provide inexpensive and scalable solutions. The mobile-first infrastructure supports rapid adoption of AR and VR in defense. Asia-Pacific also benefits from increasing defense budget. This region focuses on the expansion of innovation and security, driving AR & VR adoption across land, air, and naval forces in this region.

COVID-19 Impact Analysis:

The outbreak of COVID-19 accelerated the adoption of AR and VR in defense. Travel restrictions and lockdown disrupted traditional training and planning. Defense agencies turned to virtual solution to maintain readiness. AR and VR enabled remote collaboration and simulation-based exercises. The procurement of immersive technologies increased during the crisis. The vendors adapted their offerings to support remote deployment and maintenance. Training programs were transferred to virtual formats across regions. The need for flexible systems became important. Post-pandemic, AR and VR remain central to hybrid defense strategies. Their role in continuity and preparedness has strengthened long-term demand across the sector.

Latest Trends and Developments:

AR and VR in defense are evolving with AI, 5G, and edge computing integration. Helmet-mounted displays and smart glasses are becoming standard in field operations. Real-time data overlay improves warfare awareness. VR simulators now support multi-domain training, including cyber and space. Cloud-based platforms enable remote access and updates. Defense contractors focus on modular and scalable systems. Interoperability across equipment and networks becomes a key priority. AR is used for guided maintenance and logistics tracking. VR supports command briefing and mission rehearsal. These innovations enhance agility, reduce costs, and improve operating results in defense forces.

Key Players in the Market:

1. Elbit Systems Ltd.
2. CAE Inc.
3. HTC Corporation
4. Varjo Technologies Oy.
5. Thales Group
6. Saab AB
7. Lockheed Martin Corporation
8. BAE Systems plc
9. Northrop Grumman Corporation
10. RTX Corporation

Latest Market News:

• May 2025: ThirdEye has launched an upgraded version of its AR/AI software ecosystem, transforming it into a unified no-code platform designed to support enterprise and defense applications. The platform is intended to streamline deployment and workflow digitization across sectors such as field services, healthcare, defense, and manufacturing.ThirdEye stated that the platform supports a wide range of applications, including military and defense training through immersive AR simulations with real-time feedback and mission playback.
• March 2025: Lumus announced that it has been selected as the optical engine partner by Holochip for its new H50 AR device designed to support the maintenance of critical U.S. Navy equipment.Equipped with Lumus' Maximus geometric optical engines, it features a 1440 x 1440 pixel resolution, a 35 x 35 degrees (WxH) field-of-view and a battery life of more than six hours. The goggle-style AR device also boasts cutting-edge AR capabilities such as spatial cognition, rendering, displaying indications, sensor input, WiFi and Bluetooth connectivity.