By the end of November 25th, 2023, U.S. sales for VR headsets and AR glasses had experienced a drop of around 40%, according to information provided by Circana.Meta to CNBC. CEO Mark Zuckerberg has confidently claimed that the metaverse, which Meta has invested billions of dollars into every quarter, will eventually be the source of the company's success. Even with the launch of the Quest 3 headset in October, the entirety of 2023 was not able to be recovered.
Despite investing billions of dollars a quarter to realize its CEO Mark Zuckerberg's vision of a metaverse, Meta is facing a contraction in the virtual reality market. U.S. sales of AR and VR devices saw a dramatic decrease of 40% to $664 million in 2023, according to Circana data. This two-year decline indicates the challenge that Meta has in introducing this technology to the mainstream. Zuckerberg declared in 2021 that it would take a decade to reach a billion users, however, he may have to inform shareholders of more positive data to appease them, considering their critical attitude towards Meta's massive investments. Currently, there is no groundbreaking success or "killer app" to confirm Zuckerberg's scheme. Meta's Reality Labs, which is working on VR and AR products, reported a $3.7 billion loss in the third quarter with $210 million in sales. Since the launch of 2022, the division has endured a deficit of approximately $25 billion. While CTO Andrew Bosworth described AI and the metaverse as Meta's "two long-term bets on technologies of the future," it is yet to be seen if these costly investments will pay off. Meta is the market leader with its Quest-branded headsets making up most of the U.S. market. Sony's PlayStation VR2 headset, which came out in the beginning of the year, has seen limited success due to its reliance on the PS5 gaming console. The industry has not had a great year, as a result of a lack of new stand-alone VR headsets and an absence of a widely popular go-to app. With the Quest 3 VR released in October, starting at $499, sales have been strong enough to keep the holiday market buoyed, despite the overall weak year.
Over the eight-week period between October and November, Circana data has shown that sales of virtual reality (VR) headsets in the US amounted to $271 million, a 42% increase from the $191 million generated during the same period in the prior year. According to Arnold, the design and appeal of VR headsets have notably evolved, but the challenge lies in developing "great content" for the hardware that would make it worth the developer's while. In response to this, Meta released its Quest 3 headset with its passthrough feature, allowing for augmented reality experiences with the combination of real-world and digital graphics. Post the launch of the Quest 3, seven of the top-20 apps are now mixed-reality apps, according to a blog post by Bosworth. Further, Meta is testing out generative AI technologies with its Ray-Ban smart glasses, which could help people to translate languages or come up with funny captions for photographs. The glasses' second-generation was released in October, and are priced at $299. All of these pushes by Meta are in line with Zuckerberg's vision for a metaverse, which has previously been focused on the Quest headsets.
Heading into 2024, Apple's entrance into the VR market is the wild card. The company unveiled its Vision Pro mixed-reality headset in June with a starting price of $3,499, suggesting that their target customers are early adopters, developers, and companies. The prospect of integrating with popular products such as the iPhone and iPad has excited VR enthusiasts. Despite not responding to requests for comment, Apple's entrance into the market in the upcoming year could be pivotal to promoting the growth of the VR and AR markets, according to IDC. Analyst Andrew Boone of JMP Securities is impressed by Apple's Vision Pro demos, but believes that the high price of the headset would make it less attainable for the masses. In comparison, the Oculus Quest appears to be more game-focused.
Boone commented that there is sufficient difference between the Quest and Vision Pro devices, that they can cater to distinct audiences. Nevertheless, he anticipates learning a great deal more about the VR marketplace in the course of the following twelve months. Rolf Illenberger, the CEO of the German virtual reality company, VRdirect, noted that companies are enthused about the Vision Pro device "due to the fact that it is an Apple product", yet there is a perception that it is more of an "lifestyle" device. Apple spotlighted more amusement applications, for example, the capacity to watch movies on a big virtual display. Apple characterizes the Vision Pro as a "spatial computer", equipped for combining the physical realm with digital visuals and material. Regarding this, Arnold of Circana commented that the product is of a high quality, accordingly resulting in people pondering what an "ultra-premium experience" is and what use cases follow from it. for Augmented Reality and Virtual Reality
Illenberger observed that Meta's Quest 3 could have a significant impact in the corporate sector for applications such as staff training, onboarding and advertising. He pointed out that it is cheaper than the Quest Pro, launched in 2022 as a more business-oriented product, while having a number of equivalent qualities. On the other hand, he noted that it is complicated to persuade clients to spend even $500 on virtual reality outside of "early adopters and hardcore gaming kids". As far as business VR systems are concerned, Meta and Taiwan's HTC are the prime suppliers, while ByteDance's Pico headsets have been losing momentum. Although ByteDance were not available to comment, Illenberger claimed that the company's decision to change its name to Meta in late 2021 has had a beneficial effect in terms of selling its devices, as it has helped to distance itself from Facebook and its multiple data privacy issues. "The rebranding was a great move," he said. "Not only because Zuckerberg was claiming the market, but because people are more and more forgetting that Meta is part of Facebook."
Don't forget to catch the stories from CNBC PRO:Experts advise buying these five stocks before the year-endMorgan Stanley fund manager recommends four stocks to get 'on the cheap'JPMorgan's take on Chinese stocks doesn't include AlibabaAnalysts are extremely bullish on this self-driving car tech stock, predicting over 400% gains
Comments