- VR headset sales in the US dropped 40% in 2023 to $664 million after a 2% decline in 2022, highlighting Meta’s struggle to mainstream immersive technology
- Meta’s Reality Labs division, responsible for VR/AR development, lost $3.7 billion in Q3 2022 and over $2.5 billion so far this year
- While consumer sales have struggled, enterprise demand for VR shows promise – the Quest 3’s lower price and Meta rebranding from Facebook appeals for workforce training and marketing uses
Meta continues to pour billions into developing its vision for the metaverse, a futuristic virtual world that CEO Mark Zuckerberg believes will be the future of the company. However, the overall virtual reality (VR) market has been shrinking rapidly in 2023.
VR Headset Sales Plunge 40%
Sales of VR headsets and augmented reality (AR) glasses in the US plummeted nearly 40% to $664 million so far in 2023. This steep drop comes on the heels of a 2% decline to $1.1 billion in 2022, highlighting Meta’s struggle to bring immersive technology into the mainstream. The company has yet to produce a “killer app” that validates Zuckerberg’s costly investments.
Meta’s Reality Labs Division Struggles
Meta’s Reality Labs division, responsible for developing VR and AR technologies, lost $3.7 billion in Q3 2022. Total losses for the division have reached about $2.5 billion so far this year. Meta is the current leader in the VR market, with its Quest headsets making up the bulk of US sales.
Quest 3 Boosts Market Over Holidays
The October debut of Meta’s latest headset, the Quest 3, helped lift VR sales over the holidays. Quest 3 sales generated $271 million during the October-November period, a 42% increase year-over-year. The $499 starting price likely limited more widespread adoption.
Developers Excited About Passthrough AR
The Quest 3’s “passthrough” augmented reality feature, which mixes digital graphics with real-world views, has developers excited. Meta says 7 of the top 20 Quest apps already utilize passthrough, and adoption is strong. The company’s latest smart glasses also utilize AI for translation and captioning.
Enterprise Market Offers Growth Potential
While consumer sales have struggled, enterprise demand shows promise. Meta’s rebranding from Facebook has made business customers more comfortable purchasing its devices. The Quest 3’s lower price point also makes it appealing for applications like workforce training and marketing.
The VR market faces an uncertain future, but the entry of major players like Apple and Meta’s continual metaverse investments could pay dividends down the road. For now, the industry must focus on developing compelling content and use cases to complement the rapid hardware advances.
