Decline in Augmented and Virtual Reality Headset Shipments Indicates Shift Towards Newer Technologies

by Annabelle Stephenson
in Action, News, VR
on 19 June 2024

The global market for augmented reality (AR) and virtual reality (VR) headsets suffered a significant downturn in the first quarter of 2024, as reported by market intelligence firm International Data Corp. (IDC). Shipments dropped by 67.4% year over year, indicating a shift in the market towards newer categories such as Mixed Reality (MR) and Extended Reality (ER).

Brands and developers are recognizing the rising popularity of mixed reality, prompting a decline in strictly virtual reality headsets. With mixed reality, virtual experiences are enhanced by blending real-world views through the use of cameras. This technology offers consumers a more immersive and interactive experience, hence the transition towards AR.

Furthermore, the introduction of Extended Reality (ER) displays has gained significant traction. These displays provide users with large-screen experiences that integrate artificial intelligence (AI) features. As consumers seek more advanced and integrated functionalities, ER displays are meeting their demands.

Market recovery seems imminent, with IDC projecting a 7.5% growth in headset shipments later this year. This rebound will be driven by the introduction of newer, more affordable devices in the market. Despite the decline in AR and VR headset shipments, the average selling price (ASP) for headsets has surged past $1,000. This increase can be attributed to market entries by Apple with its Vision Pro headset and Meta’s focus on premium offerings like the Quest 3.

Meta currently holds the top position in market leadership, with Apple securing second place due to its recent debut. Other significant players include ByteDance, Xreal, and HTC. While premium models like the Quest 3 and Vision Pro have contributed to driving up the ASP, there is still a range of lower-cost VR and ER devices available in the market. Many VR and ER devices are priced below $500, ensuring affordability for consumers.

Looking ahead, IDC projects a compound annual growth rate of 43.9% for headset shipments from 2024 to 2028. As the market continues to evolve and expand, the introduction of newer technologies and more affordable options will drive significant growth. The future of augmented and virtual reality remains promising, albeit with a greater focus on mixed reality and extended reality.

Additional facts:

– Mixed reality (MR) combines elements of both virtual reality (VR) and augmented reality (AR) to create a seamless blend of virtual and real-world experiences. This technology allows users to interact with the digital content in their physical environment.

– Extended reality (ER) is an umbrella term that encompasses virtual reality, augmented reality, and mixed reality. It refers to any immersive technology that extends the user’s perception of reality.

– The decline in AR and VR headset shipments is not indicative of a decline in the overall demand for immersive technologies. Instead, it suggests a shift in consumer preferences towards newer and more advanced technologies.

– The COVID-19 pandemic has played a role in the declining shipments of AR and VR headsets. The global health crisis has disrupted supply chains and caused delays in production, impacting the availability of these devices in the market.

Key questions:
1. Why are mixed reality and extended reality gaining popularity?
Mixed reality and extended reality offer more immersive and interactive experiences by blending virtual and real-world elements. This enhanced level of engagement is appealing to consumers and offers a wider range of applications across various industries.

2. What are the advantages of mixed reality over virtual reality?
Mixed reality allows users to interact with both virtual content and their surrounding physical environment. This provides a more seamless and natural experience, as users can see and manipulate virtual objects within their real-world context. It also enables the integration of real-time data and information, enhancing the overall utility of the technology.

3. What are the challenges associated with the adoption of mixed reality and extended reality?
One of the main challenges is the development of compelling and practical applications that fully utilize the capabilities of these technologies. There is also a need for increased investment in research and development to improve the hardware and software components of MR and ER devices. Additionally, issues related to privacy, data protection, and user safety need to be addressed to ensure widespread adoption.

Advantages of mixed reality and extended reality:
– Enhanced immersion and interactivity.
– Integration of real-world and virtual content.
– Wide range of applications across industries, including gaming, entertainment, education, healthcare, and more.
– Potential for improved productivity and efficiency in various work settings.

Disadvantages of mixed reality and extended reality:
– Higher costs compared to traditional display technologies.
– Limited availability of content and applications.
– Technical challenges in hardware and software development.
– Potential for privacy and safety concerns.