Augmented Reality (AR) and Virtual Reality (VR) Headsets See Big Drop, New Categories Rise
The global market for augmented reality (AR) and virtual reality (VR) headsets saw a sharp decline in the first quarter of 2024, with shipments dropping by 67.4% compared to the previous year. This information comes from market intelligence firm International Data Corp. (IDC).
Market Shifts Toward New Categories
According to the IDC, this significant decline is linked to the market’s shift towards newer categories like Mixed Reality (MR) and Extended Reality (ER).
Higher Prices Despite Lower Shipments
Even though the number of headsets shipped fell steeply, the average selling price (ASP) for headsets went up to over $1,000. This increase is mainly because Apple entered the market with its high-end Vision Pro, and Meta focused on premium models like the Quest 3. The revised IDC taxonomy now includes MR, which uses cameras to blend real-world views into the virtual experience, and ER, which offers a heads-up display that mirrors content from another device.
Industry Experts Weigh In
“With mixed reality on the rise, strictly virtual reality headsets are set to decline,” said Jitesh Ubrani, research manager at IDC. He also mentioned that brands and developers are moving towards augmented reality to meet future demands.
Ubrani added that extended reality (ER) displays are gaining popularity, offering consumers large-screen experiences with integrated AI features.
Market Leadership
In terms of market leadership, Meta continued to hold the top position, while Apple’s recent debut secured it the second spot. Other significant players included ByteDance, Xreal, and HTC. Although premium models like the Quest 3 and Vision Pro have driven the market’s ASP up, many lower-cost VR and ER devices remain available.
Affordable Options Still Available
“While AR headsets traditionally have high ASPs, VR, MR, and ER headsets have generally been more affordable,” said Ramon T. Llamas, research director at IDC. “The entry of Apple’s Vision Pro raised MR headset prices, but affordable options from Meta and HTC have helped keep the increase in check. Many VR and ER devices are still priced below $500.”
Market Recovery Expected
IDC expects the market to bounce back, with headset shipments anticipated to grow by 7.5% later this year. This recovery will be spurred by newer, more affordable devices. IDC projects a compound annual growth rate (CAGR) of 43.9% for headset shipments from 2024 to 2028, as the market continues to evolve and expand.
