The global market for augmented reality (AR) and virtual reality (VR) headsets experienced a significant downturn in the first quarter of 2024, with shipments dropping by 67.4% year over year, according to market intelligence firm International Data Corp. (IDC).
The IDC said the decline is aligned with the market’s shift toward newer categories like Mixed Reality (MR) and Extended Reality (ER).
Despite the steep fall in shipments, the average selling price (ASP) for headsets surged to over $1,000. This increase is attributed to Apple’s market entry with its Vision Pro and Meta’s focus on premium offerings such as the Quest 3. IDC’s revised taxonomy now includes MR, which uses cameras to blend real-world views into the virtual experience, and ER, which provides a heads-up display mirroring content from another device.
“With mixed reality on the rise, strictly virtual reality headsets are expected to decline,” said Jitesh Ubrani, research manager at IDC. “Brands and developers are transitioning toward augmented reality to meet future demands.”
Ubrani also noted that ER displays are gaining traction, offering consumers large-screen experiences with integrated AI features.
Market recovery
In terms of market leadership, Meta maintained its top position, while Apple’s recent debut secured it the second spot. Other significant players included ByteDance, Xreal, and HTC. The higher prices for premium models like Quest 3 and Vision Pro have been instrumental in driving the market’s ASP up, though a variety of lower-cost VR and ER devices remain available.
“While AR headsets traditionally have high ASPs, VR, MR, and ER headsets have generally been more affordable,” said Ramon T. Llamas, research director at IDC. “The entry of Apple’s Vision Pro elevated MR headset prices, but affordable options from Meta and HTC have kept the increase in check. Many VR and ER devices are still priced below $500.”
IDC anticipates a recovery in the market, with headset shipments expected to grow by 7.5% later this year. This rebound will be driven by newer, more affordable devices. IDC projects a compound annual growth rate (CAGR) of 43.9% for headset shipments from 2024 to 2028, as the market evolves and expands.