Meta Platforms’ Oculus Quest 2 virtual reality (VR) at the Telefonica SA stand during the second day of the Mobile World Congress held at the Fira de Barcelona venue in Barcelona, Spain, on Tuesday, February 28, 2023. Participants wearing headsets.
Angel Garcia | Bloomberg | Getty Images
Sales of VR headsets and augmented reality glasses in the U.S. plunged nearly 40% in 2023 to $664 million as of Nov. 25, according to data shared with CNBC by research firm Sarcana. . This is a sharp drop from last year, when sales of AR and VR devices fell 2% to $1.1 billion.
The two-year decline highlights Meta’s continued challenge to bring immersive technology from niche gaming corners to the mainstream. When Zuckerberg announced that Facebook would turn to Meta in late 2021, he said it would take 10 years to reach 1 billion users, but the company’s large and risky He said companies may need to start presenting more optimistic data to appease shareholders who have been critical of the company. investment.
So far, there hasn’t been a breakthrough success or killer app that validates Zuckerberg’s vision. Meta’s Reality Labs division, which develops VR and AR technology, posted a loss of $3.7 billion on revenue of $210 million in the third quarter. The division has lost a total of about $25 billion since early 2022, shortly after Mr. Zuckerberg changed the company’s name.
Mr. Mehta declined to comment for this article, but noted the following: blog post Andrew Bosworth, chief technology officer who runs Reality Labs, said Monday. Bosworth called artificial intelligence and Metaverse “two long-term bets on the technology of the future” and said they are starting to “intersect in the form of products that are accessible to vast numbers of people.”
“Making long-term bets on emerging technologies is not easy,” Bosworth wrote. “There’s no guarantee it will work, and it won’t be cheap. And it’s one of the most valuable things a technology company can do, and it’s the only way to stay relevant in the long term.”
Meta said it is currently the leader in the VR market, with sales of its Quest-branded headsets accounting for a significant portion of the U.S. market. ben arnold, Consumer Technology Analyst at Circana. Sony launched its second-generation PlayStation VR2 headset earlier this year, but the device hasn’t gained much market share, Arnold said, in part because of its reliance on the PlayStation 5 video game console.
Sony did not respond to a request for comment.
Arnold said the market’s tough year is due to a lack of new standalone VR headsets that could excite users, as well as a continued lack of innovative apps with broad appeal among mainstream consumers. I think it depends on what you’re doing.
Meta debuted the Quest 3 VR in October, starting at $499, which was $200 more than the original 2020 price of the base model of its predecessor, the Quest 2. At least he had enough sales during the important holiday period to boost the VR market. If the entire year was a week.
Facebook Chief Technology Officer Andrew Bosworth speaks at the MetaConnect event at Meta Headquarters in Menlo Park, California on September 27, 2023.
Josh Edelson | AFP | Getty Images
U.S. VR headset sales for the eight-week period from October to November were $271 million, up 42% from $191 million a year earlier, according to Circana data.
Arnold said the design and appeal of VR headsets has improved significantly in recent years, and that “products are progressing on a schedule that makes sense.”
“If there’s a challenge there, it’s how do we get great content on this hardware, levers that allow developers to put more resources into building games and building experiences of some kind? It’s about how you pull it,” Arnold said. “It’s about the economics, how many people are attracted to this platform or this particular device, and if I’m a developer, is it worth it?”
Meta believes the Quest 3 will inspire developers to create engaging apps and games that take advantage of the device’s so-called pass-through feature, which enables augmented reality experiences that combine digital graphics with real-world experiences. I hope so. Many developers who attended Meta’s Connect conference in September said the pass-through technology represented an upgrade from Quest 2.
“Within months of MetaQuest 3’s launch, seven of the top 20 apps were mixed reality apps,” Bosworth wrote in his blog post. He added that Mehta “sees strong signs that people really value these experiences.”
Bosworth said Meta is testing generative AI technology to enable its latest Ray-Ban smart glasses to translate foreign languages and “put funny captions on the photos you take.”
“Ray-Ban Meta smart glasses allow AI to see the world from our perspective for the first time,” he wrote.
The company’s second-generation Ray-Ban glasses went on sale in October with a starting price of $299. Mehta hopes the device will provide a new avenue for Zuckerberg to realize the Metaverse vision previously tied to the Quest headset.
Heading into 2024, the biggest wildcard in the VR market is Apple.
In June, Apple announced the Vision Pro mixed reality headset, expected to hit the market next year with a starting price of $3,499.
The premium price suggests Apple is targeting early adopters, developers and enterprises as potential customers, VR developers told CNBC at Meta’s Connect event. VR enthusiasts are excited about Apple’s first headset, given the company’s huge success with consumer devices and the potential for Vision Pro to integrate with products like the iPhone and iPad. Masu.
Apple did not respond to a request for comment.
According to , the Vision Pro’s debut could also play a pivotal role in strengthening the emerging VR and AR market in 2024. the study From IDC. “Apple’s entry next year will bring much-needed attention to the small market, but other companies will also do so in different ways,” IDC Research Director Ramon Lamas said in a September news release on market conditions. “We will be forced to compete.”
JMP Securities analyst Andrew Boone said he was initially so impressed with Apple’s Vision Pro demo that he began to worry about Meta’s future in the market.
Boone said the initial thought was that “Apple would give up on Meta because they were so far ahead.”
“I think my tone about it has changed,” he said. “I think the price was too high to really get mass demand, so Zuck is pursuing another version of this. Obviously, Quest is more focused on gaming.”
Boone says there is “sufficient differentiation” between Quest and Vision Pro devices to accommodate a variety of users, but expects to learn more about the VR market over the next 12 months. I look forward to it.
Rolf Illenberger, CEO of German VR startup VRdirect, said companies are excited about the Vision Pro “because it’s Apple,” but recognize that it’s more of a “lifestyle” device. He said there is. Apple’s demo highlighted more entertainment-friendly uses, such as the ability to watch movies on a giant virtual display. Apple describes Vision Pro as a “spatial computer” that can blend the physical world with digital content and visuals.
“Because the product is premium, it also got people thinking about what a super-premium experience looks like and what are the use cases that come from that,” Circana’s Arnold said.
Illenberger believes that Meta’s Quest 3 could have a significant impact on tasks such as employee training, onboarding, and marketing within companies. He noted that the device is $500 cheaper than the Quest Pro, released in 2022 as a more business-oriented device, and has many of the same features.
Consumers have an even harder time. Other than “early adopters and hardcore gaming kids,” Illenberger says, “there’s no compelling enough argument for him to spend $500 on VR.”
In the enterprise VR market, Meta and Taiwan’s HTC are the main suppliers of devices. TikTok’s parent company ByteDance’s Pico-branded headsets are “increasingly losing ground,” Illenberger said.ByteDance is reportedly has canceled the next version of its Pico headset and is instead shifting resources to another device similar to Apple’s Vision Pro.
ByteDance did not respond to a request for comment.
Regarding sales to businesses, Illenberger said Meta is starting to benefit from the name change in late 2021. Zuckerberg’s rebranding has had a “psychological” impact on some companies, who said they feel safer buying devices without the stigma. Facebook brand and numerous data privacy scandals associated with it
“Rebranding the company to Meta was a genius move,” Illenberger said. “It’s not because he’s claiming a market for his company, but people are increasingly forgetting that Meta is actually Facebook.”
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