Virtual reality market to become more competitive

All eyes will be on Apple as it launches first headset next year

The virtual reality (VR) market is set to become more competitive in the coming years, with Apple providing more competition to current leaders Meta, according to a report released this week by industry analysts International Data Corporation (IDC).

“All eyes will be on Apple as it launches its first headset next year, and while it is tempting to imagine the company shipping high volumes, keep in mind that this is its first headset that will appeal primarily to a small audience of early adopters and Apple fans,” research director with IDC’s Augmented and Virtual Reality team Ramon Llamas explained.

“Further iterations will likely show evolution that will grow by leaps and bounds, however, in the meantime, companies like Meta and Sony already have a strong installed base and pent-up demand that they can tap into. Altogether, this is a strong driver to push the market forward,” Llamas added.

Based on IDC’s Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, global shipments for VR headsets rose sharply during the first quarter of 2022, increasing by 241.6 per cent year-on-year.

This was attributed to strong and steady demand for this product category, combined with easing supply.

However, the yearly increase in shipments was somewhat skewed by the fact that the first quarter of the previous year was riddled with supply chain disruptions.

During this time, Meta further consolidated its foothold, grabbing a massive 90 per cent share of the market, buoyed by the great success and popularity of the Oculus Quest 2 headset.

In addition, sales were further bolstered by Meta’s catalogue of exclusive content, as well as its decision to continue subsidising its hardware, thus making it more competitive in pure price terms.

This was followed by ByteDance’s Pico with 4.5 per cent of the market.

Though China remains Pico’s primary market, it still has a presence in a number of other markets around the world, particularly in commercial applications.

The remaining top five companies in the VR segment were DPVR, HTC and iQIYI, who had less than 4 per cent of the market put together.

“Meta continues to pour dollars into developing the metaverse but the strategy of promoting low-cost hardware at the expense of profitability isn’t sustainable in the long run,” research manager for IDC Mobility and Consumer Device Trackers Jitesh Ubrani said.

“The good news is that the upcoming productivity-oriented headset from Meta will serve as the starting point for the company’s pivot towards higher revenue generating hardware and will also help provide an uplift in end-user pricing for the entire industry as average selling prices creep up and the tech substantially improves,” Ubrani added.

Moreover, IDC noted that VR shipments are expected to increase further during the current year, as volumes for the entirety of 2022 are estimated to reach 13.9 million units, reflecting a rise of 26.6 per cent.

Finally, the company explained that 2023 will “serve as a crucial year for the VR industry (and by extension, augmented reality as well) as next generation headsets from Meta, Pico, and Sony are expected to launch alongside a headset from Apple that is expected to provide a mixed reality experience”.