IDC: Outlook Remains Positive for VR Despite Shipment Decline in 2018 Q2

Worldwide shipments of VR headsets were down 33.7% year-on-year in the second quarter of 2018, according to IDC. Analysts expect this to be a temporary setback as the VR market finds its legs. The arrival of new products, such as the Oculus Go and HTC Vive Pro, and new brands, combined with the need for greater headset fidelity all point to a positive outlook ahead.

Screenless viewers brought a lot of attention to VR in the early days, as the entire market was artificially propped up by brands like Samsung, Alcatel and Google that bundled the headsets with smartphones. However, since then, the screenless viewer category has declined substantially, shrinking from 1 million headsets in the second quarter of 2017 to 409,000 in the same quarter in 2018. This category was the largest contributor to the decline.

Facebook announced Oculus Go at its Oculus Connect 4 event in October 2017.

Tethered VR headsets declined 37.3% in the second quarter, largely because major brands like Oculus and Sony were unable to maintain the momentum established during a period of price reductions in the same quarter the year before.

As a result, the two brands managed to ship 102,000 and 93,000 headsets respectively in the second quarter of 2018. The category leader, HTC, shipped close to 111,000 headsets (excluding the standalone Vive Focus), thanks to the growing popularity of the Viveport subscription service, as well as the launch of the Pro headset.

Standalone VR headsets grew 417.7% during the quarter, largely due to the global availability of the Oculus Go and Xiaomi Mi VR, which managed to ship 212,000 headsets.

While the consumer side of the VR headset market remains the focus of attention, the commercial side has seen pilots and large-scale deployments gaining traction. In the second quarter of 2018, roughly 20% of VR headsets were destined for the commercial sector, up from 14% in the same quarter in 2017. Along with the increase in share, ASPs have also increased from $333 to $442 during the same period. Senior analyst Jitesh Ubrani commented:

“One of the major issues with the market is that consumers still find it difficult to try a VR headset. This is where the commercial market has an opportunity to shine. HTC’s recent partnership with Dave & Busters or Oculus’ work with schools around the world will play an important role in educating and enticing consumers to use VR”.

Programme VP Tom Mainelli added:

“In a marke0001DSC 2779 Edit copyt where mainstream VR content is still lacking, a growing number of vendors are looking to commercial as a way to build their business while they wait for the consumers to catch up. These vendors are moving beyond entertainment-focused B2C deployments to real-world training scenarios in companies of all sizes, all over the world. IDC expects commercial buyers to represent an increasingly important percentage of the market going forward”.