Counterpoint: Global XR (VR/AR) headset shipments are expected to exceed 100 million in 2025

According to the latest forecast from Counterpoint Global XR (VR/AR), shipments of extended reality (XR) headsets are expected to grow from 11 million units in 2021 to 105 million units in 2025, an increase of about 10 times. The rapid growth of virtual reality (VR) headsets in 2020 and 2021 is mainly due to the good performance of Oculus Quest 2 in the consumer field and DPVR and Pico in the enterprise field. We believe that XR headset sales will begin to enter a period of explosive growth in 2022, as this will be the year with the most new XR products released, including the Oculus Quest series, Sony PlayStation VR2 and the most anticipated Apple AR glasses. Oculus and Sony have created strong demand for their devices and established a good user base for upgrades, while Apple has historically been able to win in new categories with volume.

Global XR Headset Forecast 2016-2025 (by device type)

Source: Counterpoint Global XR (VR/AR) Forecast, December 2021

Commenting on the market dynamics, Karn Chauhan, Senior Analyst, said, “ VR Standalone has emerged as the preferred device type in the gaming space, primarily due to the success of Oculus Quest 2. This wireless form factor is the future of XR headsets. VR Standalone is more preferred than VR Tethered by OEMs and consumers, also due to the form factor which has led to relatively slow growth in this tethered form factor. AR started as a small segment in 2016, primarily serving the enterprise segment with high-spec, high-priced products. This is unlikely to change in the near future. However, with Apple expected to enter the AR Tethered space, we expect it to become the fastest and second largest form factor by 2025. This will also lead to more participation from other brands, especially smartphone OEMs.”

Commenting on the regional performance, Senior Analyst Harmeet Singh Walia said, “North America will remain the largest XR market given the size and advancement of both consumer and enterprise users. This demand will be met by the largest current XR brands such as Oculus and much-anticipated new entrants such as Apple. On the other hand, Europe, currently a major XR market given the size of its middle class, is expected to see relatively slow growth due to content constraints exacerbated by a lack of a common language. As a result, China is expected to see the fastest growth. China will benefit from early adoption of 5G and having a common language that makes content creation easy. Part of its demand will be met by existing OEMs such as DPVR and Pico, as well as major Chinese smartphone OEMs that will follow Apple into the XR space in the first half of this decade.”

Metaverse is the hottest term on the Internet recently, and industry players have shown great interest in it, prompting them to start some development around it. Metaverse can be a catalyst for the increase in XR in the next few years, as XR devices are the main interface to the Metaverse.