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The Outlook for AR/VR Headsets Is Expected to Improve as Mixed Reality and Extended Reality Gains Acceptance, According to IDC

Global shipments of augmented reality and virtual reality (AR/VR) headsets declined 67.4% year over year in the first quarter of 2024 (1Q24), according to new data from the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. The decline in shipments was expected as the market transitions to include new categories such as Mixed Reality (MR) and Extended Reality (ER). Despite the decline, the average selling price (ASP) rose to over $1000 as Apple entered the market and incumbents such as Meta focused on premium headsets such as the Quest 3.

IDC recently revised its taxonomy, incorporating two new categories: Mixed Reality which occludes the user's vision but provides a view of the real world with outward facing cameras, and Extended Reality, which employs a see-though display but mirrors content from another device or offers a simplistic heads-up display.

Meta again led the market in 1Q24 in terms of share, while Apple's recent entry into the market enabled it to capture the second position. ByteDance, Xreal, and HTC rounded out the top 5. Both the Quest 3 and the Vision Pro helped educate users and enticed developers to create mixed reality content, blending the digital and physical worlds. Unfortunately, this has come at a premium for users.

"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," said Jitesh Ubrani, research manager, Worldwide Mobile Device Trackers at IDC. "Meanwhile, 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."

Although ASPs for the overall market crested above the $1000 mark, this is not representative of all products. "ASPs for augmented reality (AR) headsets have almost always been above this price point, but ASPs for VR, MR, and ER headsets have typically been lower," said Ramon T. Llamas, research director with IDC's Augmented and Virtual Reality team. "Apple's Vision Pro drove ASPs higher for MR headsets, but the addition of lower cost devices from Meta and HTC have kept those ASPs from going much higher. Meanwhile, there were many devices for VR and ER priced below $500.

"Looking ahead, we anticipate ASP erosion across all products," Llamas continued. "Because the overall market is still in its early stages with more expensive first- and second-generation devices, prices will be high even as early adopters buy them. In order to reach scale in the mass market, vendors will need to reduce prices on later and upcoming devices."

IDC forecasts headset shipments will return to growth later this year with volume growing 7.5% over 2023. Newer headsets and lower price points will help with the turnaround expected later this year. Beyond that, headset shipment volume is expected to see a compound annual growth rate (CAGR) of 43.9% from 2024–2028.

A graphic illustrating IDC's 2024-2028 AR/VR headset forecast by headset type (AR, ER, MR, VR) is available by viewing this press release on IDC.com.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly Excel deliverables and on-line query tools.

For more information about IDC's Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, please contact Jackie Kliem at 508-988-7984 or jkliem@idc.com.

Click here to learn about IDC's full suite of data products and how you can leverage them to grow your business.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.

All product and company names may be trademarks or registered trademarks of their respective holders.

Global shipments of augmented reality and virtual reality (AR/VR) headsets declined 67.4% year over year in Q1 2024, according to new data from the IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker.

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