IDC expects Meta to lose its VR dominance

2022/07/07 Innoverview Read

IDC predicts Meta will lose its dominant marketshare in the VR market in the coming years.

The VR industry is growing rapidly. During Q1 2022, global VR headset shipments increased 241.6 percent compared to the same period last year.

Meta continues to dominate the market amid the success of its Quest 2 headset. According to IDC, Meta has now captured 90 percent of the market.

According to IDC, the biggest rival to Meta currently is ByteDance’s Pico; despite having just 4.5 percent marketshare. ByteDance’s expansion beyond China into European markets is expected to help attract a larger audience “in the coming quarters.”

Other rivals – including HTC, DPVR, and iQIYI – round out the top five VR companies but have less than four percent marketshare combined. 

Part of the reason for Meta’s success is the attractive price point of its Quest headsets when compared to rivals. However, to achieve these prices and entice new users, Meta is subsidising the hardware and offering exclusive content.

“Meta continues to pour dollars into developing the metaverse but the strategy of promoting low-cost hardware at the expense of profitability isn’t sustainable in the long run,” said Jitesh Ubrani, Research Manager for IDC Mobility and Consumer Device Trackers.

“The good news is that the upcoming productivity-oriented headset from Meta will serve as the starting point for the company’s pivot towards higher revenue-generating hardware and will also help provide an uplift in end-user pricing for the entire industry as average selling prices creep up and the tech substantially improves.”

VR headset shipments are expected to continue growing throughout 2022 to reach 13.9 million, a 26.6 percent increase over last year.

Next-generation headsets are expected to be launched in 2023 from Meta, Pico, Sony, and others. However, it’s Apple entering the market with its mixed reality headset that is expected to really shake up the market.

“All eyes will be on Apple as it launches its first headset next year, and while it is tempting to imagine the company shipping high volumes, keep in mind that this is its first headset that will appeal primarily to a small audience of early adopters and Apple fans,” noted Ramon Llamas, Research Director with IDC’s Augmented and Virtual Reality team.

“Further iterations will likely show evolution that will grow by leaps and bounds. In the meantime, companies like Meta and Sony already have a strong installed base and pent-up demand that they can tap into.

“Altogether, this is a strong driver to push the market forward.”

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