London, UK – New research from Omdia signals a major downturn in the consumer VR market. Headset sales suffered a 24% decline in 2023, plummeting to 7.7 million units from 10.1 million in 2022. Further declines of 13% are expected in both 2024 and 2025, marking a challenging period for the VR industry before a projected resurgence from 2026.

The global active installed base remained steady at 23.6 million VR headsets in 2023, and only marginal growth is expected by 2028, signifying a plateauing market. According to Omdia’s latest Consumer VR Headset and Content Revenue Forecast, spend on VR content declined in 2023 to $844 million from the previous year's $934 million. A gradual recovery is expected starting in 2024, leading to content revenues growing to $2.3 billion by 2028. This will be largely driven by Apple's headsets, poised to inject significant momentum into the VR market.

A confluence of factors led to 2023’s dismal performance. Inflationary pressures impacted consumer spending, compounded by a gradual decline from 2021’s pandemic-induced peak. Moreover, the underperformance of three pivotal headsets, namely Meta Quest 3, Sony PlayStation VR2 (PSVR2), and Pico 4 deepened the downturn in 2023.

Meta's limited AR content and the $500 price tag on Quest 3 discouraged upgrades and failed to attract new adopters. PSVR2 lacked compelling releases, leading to slower adoption than its predecessor, worsened by Sony's shift in focus towards expanding PS5 peripherals. Meanwhile, ByteDance's scaled back VR ambitions significantly affected Pico, resulting in canceled projects and a lack of competitive VR content, despite well-received Pico 4 hardware.

“The influx of new gaming hardware choices in 2024, including the Switch 2, mid-generation console refreshes, and Steam Deck OLED will likely relegate headsets to a lower priority for gamers, who make up VR’s core user base,” commented George Jijiashvili, Senior Principal Analyst at Omdia. “Amidst tech giants refocusing on AI, the lack of substantial investments in VR (apart from Meta) is set to result in a slump for the industry over the next two years – that’s despite Apple Vision Pro launching in 2024, which will have a limited impact until at least 2026.”