Meta is investing billions of dollars each quarter to fulfill CEO Mark Zuckerberg‘s ambitious vision of a futuristic virtual world known as the metaverse. However, despite the company’s dedication to making this dream a reality, the virtual reality market is experiencing a contraction.
Data from research firm Circana reveals a significant decline in sales of VR headsets and augmented reality glasses in the U.S., dropping nearly 40% to $664 million by November 25, 2023. This decline is more pronounced than the previous year, where sales experienced a 2% decrease, totaling $1.1 billion.
The two-year downturn highlights the company’s ongoing challenge in transitioning immersive technology from a niche gaming sector to the mainstream. Mark Zuckerberg, in the announcement of Facebook’s rebrand to Meta in late 2021, anticipated a decade to reach a billion users. However, the company is under pressure to demonstrate more positive data to appease a critical shareholder base, considering the substantial and risky investments company has made.
Despite the company’s efforts, there hasn’t been a breakout success or a “killer app” that validates Zuckerberg’s metaverse vision. The Company’s Reality Labs unit, responsible for VR and AR technologies, reported a loss of $3.7 billion in the third quarter on sales of $210 million. Since the beginning of 2022, the division has incurred losses totaling about $25 billion.
Meta, although declining to comment on the situation, directed attention to a blog post by Chief Technology Officer Andrew Bosworth. Bosworth emphasized that artificial intelligence and the metaverse are the company’s long-term bets on future technologies, now beginning to intersect in the form of products accessible to a broader audience.
Currently leading the VR market, Meta’s Quest-branded headsets dominate the U.S. market
Currently leading the VR market, Meta’s Quest-branded headsets dominate the U.S. market, with competitors like Sony struggling to gain market share. The challenging year for the market is attributed to a lack of new standalone VR headsets that excite users and the absence of a widely appealing breakout app for mainstream consumers.
In an effort to revitalize the market, The company launched the Quest 3 VR in October, priced at $499, with strong holiday season sales lifting the overall U.S. VR headset market. Consumer technology analyst Ben Arnold highlighted the improved design and appeal of VR headsets but emphasized the challenge of attracting developers to create compelling content for the platform.
Meta is banking on the Quest 3 to inspire developers, particularly by promoting the device’s passthrough feature, enabling augmented reality experiences blending digital graphics with the real world. According to Bosworth, seven of the top 20 apps within months of the Meta Quest 3 launch are mixed reality apps, signaling positive user response.
Additionally, the company is exploring generative AI technologies in its Ray-Ban smart glasses, released in October at a starting price of $299. The aim is to offer another avenue for Zuckerberg’s metaverse vision beyond the Quest headsets. Bosworth highlighted the integration of generative AI in the Ray-Ban Meta smart glasses, enabling AI to perceive the world from a human perspective for translation and creative purposes.
In conclusion, the company faces challenges in the declining virtual reality market, but with strategic product releases and a focus on generative AI, the company aims to reinvigorate interest in its metaverse vision.