According to recent research by Omdia, the consumer virtual reality (VR) market has experienced a significant downturn. In 2023, sales of VR headsets fell sharply by 24%, dropping to 7.7 million units compared to 10.1 million in the previous year. This trend is expected to continue, with further declines of 13% projected for both 2024 and 2025. Despite this slump, a resurgence in the VR market is anticipated starting from 2026.
The global active installed base of VR headsets remained stable at 23.6 million in 2023, with only marginal growth forecasted by 2028. This suggests a plateauing of the market. Spending on VR content also decreased in 2023, falling to $844 million from $934 million in the previous year. However, a gradual recovery is predicted from 2024 onwards, with content revenues expected to reach $2.3 billion by 2028.
Analysts claim the disappointing performance in 2023 can be attributed to several factors. Inflationary pressures have reduced consumer spending capacity, and the market is also seeing a decline from the peak experienced during the pandemic in 2021. Furthermore, the underperformance of key headsets such as Meta Quest 3, Sony PlayStation VR2 (PSVR2), and Pico 4 has contributed to the downturn. Meta’s limited augmented reality (AR) content and the high price of the Quest 3 have hindered adoption rates, while PSVR2 has suffered from a lack of compelling game releases and Sony’s focus on expanding PlayStation 5 peripherals. ByteDance’s reduced commitment to VR has impacted its Pico brand, leading to project cancellations and a dearth of competitive content, despite positive reception for the Pico 4 hardware.
The influx of new gaming hardware choices in 2024, including the Switch 2, mid-generation console refreshes, and the Steam Deck OLED, will likely make VR headsets a lower priority for gamers, who are the primary user base for VR. The lack of substantial investments in VR technology by major tech companies, with the exception of Meta, is expected to result in a continued slump in the industry over the next two years. This is in spite of the anticipated 2024 launch of the Apple Vision Pro, which is not expected to have a significant impact until at least 2026.
