Global XR Headset Shipments See A Major Decline, Sony Rises

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  • Sony grabbed a market share of 24% in 2023 up from 1% in 2022.
  • Bulky form factor, and lag, hinder adoption by serious gamers. 
  • Gaming remains the primary use case driving XR headset volumes.

Global Extended Reality (XR) headset shipments decreased by 19% year-on-year (YoY) in 2023. The decline was attributed to a lack of new compelling XR headsets and limited engaging use cases beyond gaming. The release of the Sony PlayStation VR2 (PSVR2) and Meta Quest 3 helped prevent a more crushing decline.

XR Headset Annual report

Meta led the market with a 59% share in 2023, down from 77% in 2022, primarily due to competition from Sony’s PSVR2. Despite a 38% YoY decline in shipment volume, Meta continued to dominate the market. The company strategically reduced the price of its Quest 2 throughout the year, appealing to budget-conscious consumers, particularly during the holiday season. 

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The Quest 3, launched in October, became the best-selling XR headset in Q4 2023, capturing over half of the market volume. Its launch-quarter shipments were 33% lower than the Quest 2’s launch quarter. Higher price, continued availability of Quest 2, and competition from other headsets affected the new launch.

Sony secured the second position in the XR market in 2023, with the successful launch of the PSVR2. The PSVR2 faced challenges such as affordability and lack of backward compatibility with PSVR games. The company grabbed a market share of 24% in 2023 up from 1% in 2022.

Gaming remains the primary use case driving XR headset volumes, but technological limitations, such as bulky form factor, and lag, hinder adoption by serious gamers. Motion sickness is another cause of lesser adoption. Some manufacturers, like Pico, have attempted to pivot streaming as a use case, but high entry barriers related to content production costs and skill gaps have limited its success.

Engaging content is crucial for greater XR adoption, and the entry of major smartphone players, particularly Apple’s Vision Pro, is expected to accelerate content production and attract more players to the segment. While the market is expected to grow slowly, original equipment manufacturers (OEMs) are likely to enter the XR space, viewing it as a potential successor to smartphones.

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