After renaming his business Meta and promising to invest billions of dollars in creating the metaverse, Mark Zuckerberg’s wager on virtual reality has yet to bear fruit more than a year later.
According to information provided by research firm NPD Group, sales of VR headsets in the U.S. this year fell 2% from a year earlier to $1.1 billion as of early December. That much money is made by Facebook’s advertising division every three days or so.
In order to bring Meta into the future while the ad industry is in a downturn, Zuckerberg has been focused on VR gadgets and related technology. However, according to data from the analysis firm CCS Insight, the number of VR headsets and augmented reality devices shipped globally fell by almost 12% from 2017 to 2022, reaching 9.6 million units.
The forecasts of shipments and sales for VR headsets paint a troubling scenario for Meta, whose stock price has fallen by approximately two-thirds this year. According to Zuckerberg, he is engaging in a long-term strategy with the metaverse and anticipates it will take up to ten years to gain widespread adoption before it can support hundreds of billions of dollars in trade. Not just Meta, either. Over the past ten years, a lot of venture capital firms and other digital businesses have staked a lot of money on a virtual future of work, education, fitness, and sports.
According to various observers, Meta’s Quest 2 headset, which was released in 2020, is by far the market leader in VR. A tiny portion of the market is taken up by rival devices from firms like Sony, HP, and Valve.
According to Ben Arnold, an analyst with NPD focused on consumer electronics, sales of Meta’s flagship Quest device declined in 2022. This fall can be ascribed to the device’s strong year in 2021.
Arnold referred to several promotions that assisted in boosting sales of the gadgets at a time when gaming systems like Sony’s PlayStation 5 were in limited supply saying that “VR had a wonderful holiday in 2021.” “Last year was a fantastic time to purchase one of these gadgets, and VR really killed it.”
According to NPD, the U.S. market for VR headsets doubled its sales in 2021 from over $530 million in 2020. Lower demand and deliveries in 2022 were a result of a number of issues.
The Quest 2 has existed for a while, but just like any electronic goods product, it has started to lose some of its allure. The Quest Pro, a new VR headset from Meta that was released in the autumn, is $1,100 more expensive than the Quest 2 and is designed for commercial use, making it even more beyond reach for many VR fans.
Because of inflationary pressures, Meta made the decision over the summer to increase the cost of the Quest 2 by $100. Given that the firm has indeed been prepared to sell the headset at such a small cost to try and promote uptake of VR and obtain a high market share, Leo Gebbie, an expert at CCS Insight, said in an email that Meta’s price increase was unexpected.