What Will It Take to End the VR Winter?

After investing more than $50bn in virtual reality (VR), Meta’s enthusiasm could be losing steam. The tech giant quietly shuttered plans last week for a new mixed-reality headset that would have gone head-to-head with Apple’s Vision Pro – scared off, no doubt, by that product’s plummeting US sales.

Despite clever marketing and viral social media campaigns, customers aren’t biting. With VR headsets still on the pricey side and big questions around form factor and use cases, the market is flat. Is it just a matter of making headsets better and cheaper – or is VR another cool technology in search of customer fit?

We examine the current state of the augmented reality and virtual reality market and ask the experts if VR’s cooling trend is here to stay.

Table of Contents Table of Contents

1. Key Takeaways
2. Ready for Prime Time?
3. What Gives? 7 Issues That Stop People From Buying
4. Signs of Hope in a Shifting VR Market
5. A Great Gadget No One Really Needs – Yet
6. The Future of Virtual Reality
7. The Bottom Line
8. FAQs
9. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Ready for Prime Time?
3. What Gives? 7 Issues That Stop People From Buying
Show Full Guide
4. Signs of Hope in a Shifting VR Market
5. A Great Gadget No One Really Needs – Yet
6. The Future of Virtual Reality
7. The Bottom Line
8. FAQs
9. References

Ready for Prime Time?

What happened to virtual reality? After a decade of being just on the verge of becoming the next big thing, two of tech’s biggest names decided its moment had arrived.

In 2021, Facebook changed its parent company name to Meta – pegging its identity to the metaverse idea of a 3D immersive internet. Two years later, Apple got into the game with the launch of the Vision Pro. Meta followed suit with its Meta Quest 3.

Today, both are seen as technically elegant, beautifully designed, state-of-the-art products, and reviews have been mostly glowing.

But Mass Adoption Still Seems an Elusive Prospect

The analyst firm’s Worldwide Quarterly Augmented and Virtual Reality Headset Tracker says some declines were expected as the VR concept is branching out into newer categories like Mixed Reality (MR) and Extended Reality (XR).

What Can Explain a Nearly 70% VR Headset Sales Drop?

Commenting on the findings, Jitesh Ubrani, IDC’s Research Manager for Worldwide Mobile Device Trackers, said:

“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.”

New hardware. New experiences. An ongoing shift to augmented reality. End users who may need ‘help’ to see value. There’s clearly something missing from today’s pure-VR products.

What Gives? 7 Issues That Stop People From Buying

It’s easy to criticize, and we’d be remiss if we didn’t point out that today’s top VR headsets display real genius.

They look amazing, they’re hugely inventive, the experience of viewing video is revelatory, and they (almost) seamlessly blend the virtual with the real.  They let you do things you couldn’t before – something that was true back in 2014 when Facebook acquired Oculus and arguably kickstarted the current VR furor.

But even if consumers stop and marvel when they see a Vision Pro or Quest 3 on display, in the end, they keep walking. What’s stopping them from buying one of their own?

1. They’re pricey. Vision Pros start at a wallet-crunching $3,500, while an entry-level Quest 3 will set you back at least $500 ($1,200 for the Pro version).
2. They’re heavy. A Quest 3 weighs more than 500 grams, and a Vision Pro weighs between 600 and 650 grams, depending on how you configure the headband and Light Seal. That’s a lot of front-loaded heft to carry on your face.
3. They’re isolating. VR headsets may be peak personal computing, in the sense that it’s only you in there. Some reviewers have noted that wearing one for an extended period can feel a bit lonely.
4. They take up a lot of space. The headset and battery won’t fit neatly into a laptop bag and probably need a separate carry case.
5. Amazing functionality, but still some issues. Video passthrough is, by definition, blurry, which can be distracting over time. Eye tracking can be inconsistent. The personas are too artificial and a bit unsettling.
6. You have to wear them. There’s no getting around it, headsets have to be worn on the head and cover the face. Your hair and/or makeup will get messed up.
7. They’re re-purposing what other devices already do. So far, the primary use cases for VR headsets are gaming, watching films, and replicating the general computing experience with VR versions of desktop apps that float in front of you. Is that an improvement on devices designed specifically for those tasks, or just a novel way to experience what’s already available elsewhere?

Ed Greig, chief disruptor at Deloitte Digital, told Techopedia that VR headsets “have improved a lot. But the overall user experience, including the time it takes to go from picking up the headset to being in-app, is still not as smooth as it could be.

“Other sources of friction, like updates and storefronts, still lag a long way behind the relatively friction-free mobile experience.”

Signs of Hope in a Shifting VR Market

Even if IDC is right and pure-VR’s days are numbered, the prospects are better when you swap ‘VR’ for ‘XR,” a broader set of categories that includes mixed reality, augmented reality, extended reality, collaborative VR, and a range of fully-immersive to semi-immersive variations on the above.

“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,” added IDC’s Ubrani.

Prices For VR Products Are Expected to Come Down

“Because the market is still in its early stages, prices will be high even as early adopters buy them,” said Ramon T. Llamas, Research Director with IDC’s Augmented and Virtual Reality team.

To reach mass market scale, he says vendors will need to re-consider price points:

“Looking ahead, we anticipate price erosion across all products.”

Industrial Use of VR & AR WIl Grow

And we haven’t even touched on the business use cases. In manufacturing, Nissan has been using virtual reality in conjunction with 3D design platforms like Autodesk to virtually fine-tune new car designs before a single panel or fender has been fabricated.

A Great Gadget No One Really Needs – Yet

It wouldn’t be the first time an amazing technology rode to market on a wave of excitement before the market was really ready.

Consider the following:

• Palm Pilot – The first mass-market touchscreen handheld. It worked, sold a million units in year one, but couldn’t keep up with Apple after a cash infusion from Microsoft re-energized its R&D.
• MySpace – the first social network, eventually overtaken by Facebook’s slicker interface and early embrace of mobile.
• Napster – the first peer-to-peer file sharing client. It catalyzed the format shift from compact discs to digital MP3s but couldn’t turn its free model into a money-maker.
• Google Glass – A much-hyped failure but provided valuable lessons about what works and what doesn’t in wearable eyewear.

google glass, circa 2013: failed miserably because people looked dumb wearing it

companies in 2023: people will wear this pic.twitter.com/8JDJIa65XU

— Tyler Glaiel (@TylerGlaiel) June 5, 2023

All of them needed a bit more something to sustain consumer interest; to find a ‘killer app,’ iron out a key element of usability, or be blended with other technologies to create something consumers couldn’t say no to.

Maybe VR’s consumer heyday is coming, just in a form we haven’t imagined yet.

The Future of Virtual Reality

It’s hard to deny that there’s still a big gap between the fully immersive digital worlds we were promised and the impressive (but still limited) video-watching/gaming consoles we got.

Looking at parallels with other tech categories, Deloitte’s Ed Greig thinks:

“We’re somewhere between the carphone and the briefcase phone stages. We haven’t had the smartphone moment yet.”

Where the firm is seeing demand is in the learning and simulation space, “with a greater recognition that solutions need to be broad and not purely headset-focused.

“Multiplayer immersive platforms are arguably the closest things to a metaverse,” Greig adds. “They also have the potential to change how people interact with brands and each other as the core generation using them matures.”

Meta itself certainly hasn’t given up. After canceling its premium Vision Pro competitor, it’s now reportedly considering a new headset that’s lighter and closer to a pair of ski goggles in weight and form factor – perhaps encouraged by the surprise success of its Ray Ban partnership.

Recap on some of the features of the RayBan Meta Sunglasses.

Yes, they come in prescription lenses and transitional lenses as well. I love rocking the shades tho 😎🤙🏽✨

There’s a bunch more features I’ll be sharing in more videos. pic.twitter.com/JgGVM5SvE2

— cowabunga chan (@cowabungachan) August 29, 2024

It’s also looking at ways to expand the VR user base, including an offer to schools and parentally-controlled access for kids.

To reach budget-conscious buyers it’s expected to launch the cheaper Meta Quest 3S any day now.

The Bottom Line

Maybe cool headsets will turn out to be the buzzy product that VR needed to drive awareness and gain acceptance. Will we look back and see them as loss leaders for future applications of the tech?

Remember that the original smartphones were basically email and web browsing devices. It was only after devs worked out new applications and use cases that the touchscreen age of mobile-first computing really kicked into gear.

FAQs