September 23, 2023
Metaverse off to ominous begin after VR headset gross sales shrank in 2022

Meta CEO Mark Zuckerberg demonstrates an Oculus Rift digital actuality (VR) headset and Oculus Contact controllers throughout the Oculus Join 3 occasion in San Jose, California, U.S., on Thursday, Oct. 6, 2016.

David Paul Morris | Bloomberg | Getty Pictures

Over a 12 months after altering his firm’s identify to Meta and committing to spend billions of {dollars} creating the metaverse, Mark Zuckerberg’s guess on digital actuality isn’t any nearer to paying off.

Gross sales of VR headsets within the U.S. this 12 months declined 2% from a 12 months earlier to $1.1 billion as of early December, in response to information shared with CNBC by analysis agency NPD Group. Fb’s promoting enterprise generates that a lot income about each three days.

With the advert enterprise mired in a stoop, Zuckerberg has been seeking to VR gadgets and associated expertise to drag Meta into the longer term. However information from analyst agency CCS Perception reveals that worldwide shipments of VR headsets in addition to augmented actuality gadgets dropped greater than 12% 12 months over 12 months to 9.6 million in 2022.

Taken collectively, the estimates of VR headset gross sales and shipments create a problematic image for Meta, whose inventory value has misplaced about two-thirds of its worth this 12 months. Zuckerberg has mentioned he is enjoying the lengthy sport with the metaverse, anticipating it take as much as a decade to go mainstream and projecting it’s going to finally host lots of of billions of {dollars} in commerce.

It is not simply Meta. Quite a few enterprise corporations and different tech firms have wagered huge over the previous decade on a futuristic world of digital work, training, health and sports activities.

Meta’s Quest 2 headset, launched in 2020, is by far the chief within the VR market, in response to a number of analysts. Competing gadgets from firms like Valve, HP and Sony characterize a small fraction of the market.

Gross sales of Meta’s flagship Quest system dropped in 2022, a decline that may be attributed to the system’s huge 12 months in 2021, mentioned Ben Arnold, NPD’s client electronics analyst.

“VR had an incredible vacation in 2021,” Arnold mentioned, referring to numerous promotions that helped enhance gross sales of the gadgets at a time when gaming consoles like Sony’s PlayStation 5 have been in brief provide. “It was a good time final 12 months to get one in all these merchandise, and VR completely crushed it.”

VR headset income within the U.S. doubled in 2021 from about $530 million in 2020, in response to NPD.

A confluence of things contributed to decrease gross sales and shipments in 2022.

Metaverse off to ominous begin after VR headset gross sales shrank in 2022

The Quest 2 has been round for a couple of years and, like every client electronics system, has misplaced some attraction because it’s aged. And whereas Meta launched a brand new VR headset in fall, the Quest Professional, that system is geared towards companies and prices $1,100 greater than the Quest 2, pushing it even additional out of attain for a lot of VR fanatics.

Meta determined over the summer season to boost the worth of the Quest 2 by $100, citing inflationary pressures.

Leo Gebbie, an analyst at CCS Perception, mentioned in an electronic mail that Meta’s value enhance was a shock “on condition that the corporate has been prepared to promote the headset at such a low margin to try to drive uptake of VR and achieve a excessive market share.”

Meta declined to remark about its VR headset gross sales or third-party estimates.

All eyes on Apple

Subsequent 12 months is anticipated to be one other “sluggish 12 months” for the VR market, CCS Perception mentioned in its newest report, citing a weak economic system and inflation.

Gebbie mentioned “client budgets might be tightening,” and “non-essential purchases like VR headsets are prone to be the casualty of this.”

Sony’s next-generation VR headset will value $550 when it debuts in February. Arnold mentioned that whereas the PlayStation VR2 will “give the market type of a shot within the arm,” it’s going to possible not affect the general VR market as a lot because the Quest 2 as a result of Sony’s system requires homeowners to have a PlayStation 5 as option to energy the headset.

Sony PlayStation VR2 headset


“The entire addressable market of the PSVR2 goes to be PlayStation homeowners,” Arnold mentioned.

A serious query for subsequent 12 months stays whether or not Apple, as lengthy rumored, will unveil a VR headset.

Apple might create a compelling VR headset with an accompanying software program ecosystem, Arnold mentioned.

Moreover, Apple’s status as a frontrunner in client expertise might present a spark to the dim VR market, making the expertise extra enticing to most people.

“If one firm has the flexibility to remodel the VR market in a single day, it is Apple,” mentioned Gebbie. “With its vastly loyal fanbase, lots of whom are comfy with spending giant quantities of cash on expertise, if Apple was to launch a headset we count on that it could carry out very effectively.”

Apple is reportedly constructing a VR headset with AR options for a launch as quickly as 2023.

Eric Abbruzzese, a analysis director at ABI Analysis, mentioned Apple might have success launching a VR headset geared towards companies, which might possible assist lure builders to the neighborhood. However the excessive value of an enterprise VR headset, which might possible retail for a number of thousand {dollars}, would nonetheless make it tough for Apple to maneuver the needle, Abbruzzese mentioned.

“It most likely will not even ship 5 million models in its first 12 months,” Abbruzzese mentioned of an Apple enterprise VR headset. “However it’s the first notable product from an enormous tech incumbent.”

Apple did not reply to a request for remark.

One main factor the VR world lacks is a breakout hit, or a killer app.

Some video games have gotten traction, just like the musical rhythm sport Beat Saber and VR variations of widespread titles like Resident Evil, Abbruzzese mentioned. And a few customers are exhibiting extra curiosity in utilizing VR for health actions.

However within the console market, blockbuster video games like FIFA and Name of Obligation are “delivery lots of of hundreds of thousands of merchandise,” he mentioned.

In the meantime Meta’s Horizon Worlds social VR platform remains to be in its experimental part.

“The one metaverse product actually is Horizon and it isn’t good proper now,” Abbruzzese mentioned.

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