LETA Capital’s State of Phygital Report Unveils a $200 Trillion Phygital Market opportunity
In a landscape where the lines between physical and digital experiences are becoming increasingly blurred, LETA Capital is presenting its annual State of Phygital report. Dedicated to examining the convergence of physical and digital worlds, the report consists of a VC market analysis in phygital tech over the last decade, case studies, and a deep overview of breakthroughs, challenges, and opportunities that we foresee in the upcoming future.
What’s new this year?
In this report, we’ve introduced several new angles to demonstrate how phygital technologies are shaping our reality right now. First, we’ve provided examples of what we define to be phygital, recognizing the ongoing lack of clarity in defining products and technologies within this space. Second, we’ve compiled open-source data showcasing how Tech Giants are investing billions of dollars in the Phygital world, propelling us swiftly towards a fully blended reality with no boundaries between the digital and physical realms. Third, we’ve assessed the challenges awaiting phygital technologies on their path to mass adoption and estimated the potential volume of the AR devices market by the end of 2029. This is an approach open to interpretation, making it all the more intriguing to share diverse views!
TAM $216 trillion, isn’t that huge?
With staggering growth projections, transformative innovations, and the support of influential players such as Microsoft, Apple, Alphabet, Meta, Amazon, and ByteDance — whose collective investments in the Phygital space have surpassed $160 billion — phygital is poised for exceptional growth. In 2022, the total Phygital devices market, encompassing smartphones, headsets, wearables, etc., was valued at $365 billion. Anticipating a tenfold expansion by 2029, the market size is projected to reach an impressive $3.9 trillion. Simultaneously, the user base of Phygital products is expected to surpass 1.4 billion globally, with the Phygital total accessible market estimated to be worth a staggering $216 trillion by 2030 (not to be confused with the actual market size, that can be 10-100x times less and significantly depends on the penetration of the disruptive tech into everyday life).
We assessed key sectors of the world economy and evaluated their upside potential upon the implementation of phygital, drawing from the OECD’s report “Digitalisation and productivity: a story of complementarities.” Notably, IT and E-commerce emerge as sectors with the most significant growth potential, projected to reach market sizes of $34 trillion and $44 trillion, respectively, with a focus on the phygital paradigm.
Outcomes
I’m convinced phygital represents a seismic shift in how we perceive and interact with the world around us. At LETA Capital, our commitment to uncovering the vast potential of this trend and its transformative impact on industries is reflected in this report. The fusion of physical and digital realms shapes the future, and our investments in this space demonstrate a belief in the profound changes that phygital will bring to our lives and the global economy. Imagine Mark Zuckerberg (or his avatar?) on the Lex Fridman podcast; soon, hardware and software tech developments will enable almost anyone, regardless of their location, to experience the same emotions and obtain the same experiences as the top 1% of people in the world. Isn’t that a monumental step towards true democratization through technology?
Take a deeper dive into a phygital market, get the full picture here LETA Capital’s Phygital Report 2023.
