Global shipments of augmented reality (AR) and virtual reality (VR) headsets experienced a significant decline of 67.4 per cent year over year in the first quarter of 2024, according to a report by the International Data Corporation (IDC).
The steep drop was anticipated as the market evolved to include emerging categories such as Mixed Reality (MR) and Extended Reality (ER).
Despite the decrease in shipments, the average selling price (ASP) of headsets rose above $1000, driven by Apple’s market entry and Meta’s focus on premium devices like the Quest 3.
IDC recently revised its classification system, introducing two new categories. These include Mixed Reality, which blocks the user’s vision but provides a real-world view through outward-facing cameras, and Extended Reality, which uses a see-through display to mirror content from another device or offers a simple heads-up display.
In the first quarter of 2024, Meta maintained its leading market share, while Apple’s recent debut secured it the second position. ByteDance, Xreal, and HTC completed the top five.
Both Meta’s Quest 3 and Apple’s Vision Pro have been pivotal in educating users and attracting developers to create mixed reality content, seamlessly blending digital and physical environments. However, this innovation has come at a high cost for consumers.
“With mixed reality on the rise, expect strictly virtual reality headsets to fade in the coming years as brands and developers devise new hardware and experiences to help users eventually transition to augmented reality further down the line,” stated Jitesh Ubrani, research manager for Worldwide Mobile Device Trackers at IDC.
“Meanwhile, extended reality displays are set to garner consumer attention as they offer a big screen experience today while incorporating AI and heads-up displays in the near future,” they added.
Although the overall market’s ASP has surpassed the $1000 mark, this figure does not reflect all products.
“ASPs for augmented reality headsets have almost always been above this price point, but ASPs for VR, MR, and ER headsets have typically been lower,” said Ramon T. Llamas, research director with IDC’s Augmented and Virtual Reality team.
“Apple’s Vision Pro drove ASPs higher for MR headsets, but the addition of lower-cost devices from Meta and HTC have prevented those ASPs from rising further. Meanwhile, many VR and ER devices were priced below $500,” Llamas added.
Llamas further commented on future pricing trends, saying that “Looking ahead, we anticipate ASP erosion across all products”.
“Because the overall market is still in its early stages with more expensive first- and second-generation devices, prices will be high even as early adopters buy them. In order to reach scale in the mass market, vendors will need to reduce prices on later and upcoming devices,” they added.
Moreover, IDC forecasts a resurgence in headset shipments later this year, with volume growing by 7.5 per cent over 2023.
The introduction of newer headsets at lower price points is expected to drive this recovery.
Beyond 2024, IDC predicts a compound annual growth rate (CAGR) of 43.9 per cent for headset shipment volumes from 2024 to 2028.
