Omdia: Consumer VR headset sales to drop 24% in 2023

A new study from Omdia shows a severe decline in the consumer VR market. Headset sales fell 24% in 2023, plunging from 10.1 million units in 2022 to 7.7 million. Further declines of 13% are expected in 2024 and 2025, signaling a challenging period for the VR industry before a recovery in 2026.

The global active VR headset installed base stabilizes at 23.6 million units in 2023, and is expected to grow only slightly by 2028, suggesting a stabilization of the market. According to Omdia's latest forecast, VR content spending will drop to $844 million in 2023 from $934 million last year. A gradual recovery is expected to begin in 2024, with content revenue growing to $2.3 billion by 2028. This will be driven in large part by Apple's headset, which will inject a huge impetus into the VR market.

A number of factors led to the dismal performance in 2023. Inflationary pressures weighed on consumer spending, compounded by a gradual decline from the pandemic-induced peak in 2021. In addition, poor performance of three key headsets, the Meta Quest 3, Sony PlayStation VR 2, and Pico 4, exacerbated the 2023 slump.

Meta's limited AR content and Quest 3's $500 price tag discouraged upgrades and failed to attract new users. PSVR 2's lack of a splashy launch led to slower adoption than its predecessor, a situation exacerbated by Sony's shift to expanding the PS5 peripherals. Meanwhile, despite the popularity of Pico 4's hardware, ByteDance's scaled-back VR ambitions severely impacted Pico, leading to project cancellations and a lack of competitive VR content.