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 in the course of the Oculus Join 3 occasion in San Jose, California, U.S., on Thursday, Oct. 6, 2016.

David Paul Morris | Bloomberg | Getty Photos

Over a yr 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 yr declined 2% from a yr earlier to $1.1 billion as of early December, based on information shared with CNBC by analysis agency NPD Group. Fb’s promoting enterprise generates that a lot income about each three days.

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


With the advert enterprise mired in a droop, Zuckerberg has been trying to VR gadgets and associated know-how to tug 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% yr over yr 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 worth has misplaced about two-thirds of its worth this yr. Zuckerberg has mentioned he is taking part in the lengthy sport with the metaverse, anticipating it take as much as a decade to go mainstream and projecting it is going to finally host a whole bunch of billions of {dollars} in commerce.

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

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

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

“VR had a tremendous vacation in 2021,” Arnold mentioned, referring to varied promotions that helped increase gross sales of the gadgets at a time when gaming consoles like Sony’s PlayStation 5 have been briefly provide. “It was a good time final yr to get certainly one of these merchandise, and VR completely crushed it.”

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

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

A brief history of the metaverse

The Quest 2 has been round for a number of years and, like every shopper electronics machine, has misplaced some attraction because it’s aged. And whereas Meta launched a brand new VR headset in fall, the Quest Professional, that machine 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 fans.

Meta determined over the summer time to lift the value of the Quest 2 by $100, citing inflationary pressures.

Leo Gebbie, an analyst at CCS Perception, mentioned in an e-mail that Meta’s worth enhance was a shock “on condition that the corporate has been keen 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 yr is anticipated to be one other “sluggish yr” for the VR market, CCS Perception mentioned in its newest report, citing a weak economic system and inflation.

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

Sony’s next-generation VR headset will price $550 when it debuts in February. Arnold mentioned that whereas the PlayStation VR2 will “give the market form of a shot within the arm,” it is going to seemingly not affect the general VR market as a lot because the Quest 2 as a result of Sony’s machine requires house owners to have a PlayStation 5 as method to energy the headset.

Sony PlayStation VR2 headset


“The overall addressable market of the PSVR2 goes to be PlayStation house owners,” Arnold mentioned.

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

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

Moreover, Apple’s popularity as a frontrunner in shopper know-how may present a spark to the dim VR market, making the know-how extra engaging to most of the 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 snug with spending massive quantities of cash on know-how, if Apple was to launch a headset we anticipate that it will carry out very properly.”

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 may have success launching a VR headset geared towards companies, which might seemingly assist lure builders to the neighborhood. However the excessive worth of an enterprise VR headset, which might seemingly retail for a number of thousand {dollars}, would nonetheless make it tough for Apple to maneuver the needle, Abbruzzese mentioned.

“It in all probability will not even ship 5 million models in its first yr,” 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 well-liked titles like Resident Evil, Abbruzzese mentioned. And a few customers are displaying extra curiosity in utilizing VR for health actions.

However within the console market, blockbuster video games like FIFA and Name of Obligation are “transport a whole bunch of tens of millions of merchandise,” he mentioned.

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

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

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