Virtual Reality: Meta Dominates A Small Market

Facebook guardian Meta Platforms (FB) has staked its long term at the metaverse — and says the easiest way to revel in it’s with its Quest digital actuality headsets. But thus far, VR tools has been a distinct segment marketplace, and a few analysts level to augmented actuality catching on with customers as an alternative.


The metaverse is a next-generation model of the web the place immersive three-D virtual worlds substitute static 2D web sites. To date, just a rather small share of other people appear keen to strap on a headset that blocks out the actual international. That begs the query: Will digital actuality ever spoil via to the mainstream?

Probably now not, says IDC analyst Jitesh Ubrani. Most primary era firms, together with Apple (AAPL) and Microsoft (MSFT), have determined to concentrate on augmented actuality headsets as an alternative, as a result of that is most probably a miles greater marketplace, he mentioned. He sees the marketplace for digital actuality headsets at tens of thousands and thousands of gadgets vs. loads of thousands and thousands for augmented actuality tools.

“Most of the big tech companies have at least tried their hand at VR,” Ubrani mentioned. “But VR ultimately doesn’t have the broad appeal that AR does. Today, VR is mostly limited to gaming on the consumer side, with fitness being the next biggest use case. On the commercial side, it is being used for training for both hard and soft skills.”

Meta Dominates Virtual Reality Headsets

In 2021, distributors shipped 10.95 million digital actuality headsets international, with Meta grabbing 80% marketplace percentage, analysis company IDC says. In 2020, digital actuality headset shipments totaled 5.56 million gadgets, with Meta taking 62% percentage.

IDC is forecasting digital actuality shipments to succeed in 38.3 million gadgets once a year in 2026. Meanwhile, it sees augmented actuality headsets attaining 12.2 million shipments in 2026.

“AR is a tiny market today, but we do expect it to ramp up in the outer years,” Ubrani mentioned. “For AR, the use cases are broader for both consumer and commercial. Unfortunately, the technology isn’t there yet.”

While digital actuality headsets immerse wearers in an absolutely virtual international, augmented actuality headsets overlay virtual knowledge onto an individual’s box of view.

Apple Prepping Mixed-Reality Gear

Apple is rumored to be operating on a mixed-reality headset that may marry digital actuality and augmented actuality era in a high-end headset. That software is more likely to pop out in early 2023, Goldman Sachs analyst Rod Hall mentioned in a contemporary notice to purchasers.

“While VR platform technology is improving, we note that the category has, so far, failed to resonate with a broad base of users,” Hall mentioned. “Having said this, our own VR unit forecast for 19.4 million units in 2023 is more bullish than IDC estimates due to our belief that the platform is likely to be seen as an improved way to collaborate remotely.”

IDC has forecast gross sales of 18.9 million in digital actuality headsets in 2023, Hall mentioned.

The vacation quarter used to be a big driving force for Meta’s Quest 2 headset gross sales closing yr, Ubrani mentioned.

After Meta, the following greatest digital actuality headset makers are China’s DPVR and ByteDance, the guardian of social media app TikTook. Rounding out the highest 5 are Taiwan-based HTC and China-based iQiyi (IQ).

Meta will face more difficult pageant when Sony (SONY) launches its PlayStation VR2 headset in overdue 2022. The PSVR2 will hyperlink to the PlayStation 5 console for enhanced gaming studies.

Meta Looking Beyond VR Headsets

However, Meta plans to free up a brand new high-end digital actuality headset later this yr. It calls the software the Quest Pro.

Meanwhile, Meta is making an attempt to expand the packages for its Quest headsets past gaming. It is selling its Horizon Worlds utility for socializing within the metaverse. It additionally has an endeavor model referred to as Horizon Workrooms.

Recognizing that now not everybody will need to placed on a digital actuality headset to revel in the metaverse, Meta is operating on a conventional internet model of Horizon Worlds. Rival virtual worlds equivalent to the ones from Epic Games, Roblox (RBLX) and Sandbox can also be accessed via PCs and cellular units.

“The biggest mistake that any of these companies could make would be to make a VR headset a requirement to experience the metaverse,” Ubrani mentioned.

Adult Content Driving VR Usage

In addition to gaming, some other utility that has been a success on digital actuality headsets is pornography. Adult content material in the past fueled early adoption of such applied sciences as videocassette recorders and the economic web.

A Juniper Research learn about estimated that gross sales of X-rated content material for digital actuality headsets totaled $716 million in 2021. It predicted that digital actuality porn would develop to $19 billion in income through 2026. Most of the digital actuality porn income could be from subscription-based services and products, Juniper mentioned.

“The U.S. will emerge as a key market for VR adult content; accounting for 33% of market spend by 2026,” Juniper analyst Scarlett Woodford mentioned in a information free up.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for extra tales on shopper era, instrument and semiconductor shares.


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