Counterpoint: Global independent VR headset market to grow 14% year-on-year in the third quarter of 2024

Counterpoint's report shows that in the third quarter of 2024, global virtual reality (VR) headset shipments fell 4% year-on-year and 16% month-on-month, marking the third consecutive quarter of decline in the market. This decline was mainly due to a 50% year-on-year decline in the bundled VR headset market this quarter. In contrast, the independent VR headset market grew 14% year-on-year.

Meta maintained its dominance in the global VR market with a 65% market share in the third quarter of 2024. However, its market share declined from the previous quarter due to a decrease in Meta Quest 3 sales as consumers waited for the launch of the lower-priced Meta Quest 3S.

Apple Vision Pro shipments doubled quarter-over-quarter following its launch in China, Europe, and Asia Pacific. However, Apple's recovery is expected to be short-lived, with sequential declines expected in the fourth quarter of 2024 as initial international market hype wanes. Counterpoint expects international sales to account for nearly 90% of Apple's total shipments in the second half of 2024.

Pico's shipments fell 2% year-on-year but increased 6% month-on-month, mainly due to the launch of Pico 4 Ultra in China and Europe, and the strengthening demand for its enterprise headsets from large-space VR tourism and entertainment projects in China. Sony's shipments fell 29% year-on-year, but its shipments more than doubled month-on-month due to the launch of its PC adapter and promotional activities in North America and Europe. Supported by strong demand in the enterprise market, DPVR achieved a year-on-year growth of 67% and a month-on-month growth of 14%.

The share of VR headsets equipped with color VST (MR functionality) surges from 6% in Q3 2023 to 80% in Q3 2024. With the launch of Meta Quest 3S, this trend is expected to reach over 90% in Q4 2024. Despite these advances, the VR industry still faces technical challenges, including achieving lightweight headsets with superior display performance, longer battery life, and a broad library of content beyond games, all at an affordable price.

Apple is reportedly testing OLED displays manufactured on traditional glass substrates for its low-cost Vision headset. This display technology could be more cost-effective than the micro-OLED displays used in the Vision Pro. However, balancing cost, display size, and resolution without compromising user experience remains a major challenge for Apple. As a result, the stagnation of the global VR market is expected to continue in the next few years, with occasional fluctuations in new product launches from major OEMs.

Despite the lackluster performance of the XR market in the third quarter of 2024, the period marked key industry advances. The debut of Meta’s Orion AR glasses and Snap’s Spectacles 24 AR glasses demonstrated the future potential of AR technology. These products highlight the industry’s efforts to combine advanced features with user-friendly design, paving the way for true AR entertainment.

Another booming market is the AR+AI smart glasses market, which is expected to gain momentum from the end of 2024 to 2025. With the advancement of generative AI technology, traditional hardware giants, AR/VR OEMs, and Internet companies are shifting their focus to the development of AR+AI smart glasses. Companies such as Rokid and INMO have already launched AR+AI glasses integrating large language models in the fourth quarter of 2024, and more products from different OEMs are expected in 2025. In addition, the launch of the Android XR operating system is also expected to drive the growth of the AR+AI smart glasses market.

While the global VR market is likely to grow only slightly in the coming years, Counterpoint expects the global AR smartglasses market to expand significantly.