A method for use with a head-mounted display in a physical environment includes obtaining depth information of the physical environment and capturing a visual image of the physical environment. The method also includes determining a spatial relationship between a user of the head-mounted display and one or more physical objects included in the physical environment based on the depth information. The visual image is then segmented based on the spatial relationship to generate a segmented image that includes the one or more physical objects. The segmented image is then overlaid on a virtual image to display both the virtual image and the one or more physical objects on the head-mounted display.