AR/VR headsets set for slower growth this year, but could heat up through 2027

A man wearing a VR headset

The analyst company IDC has announced that augmented and virtual reality (AR/VR) headset shipments are expected to see lower growth in 2023 than initially anticipated. This year, IDC expects shipments to reach 10.1 million globally, that’s up 14% compared to 2022. Over the 2023-2027 period, the compound annual growth rate (CAGR) is expected to reach a much-higher 32.6%.

As you can probably guess, the demand for headsets is being suppressed right now due to unfavourable economic conditions. Many people are struggling just to cope with higher energy and food bills and are not thinking about buying a new VR headset. Even those with money to spend are being forced to tighten their belts somewhat which would also explain the lower demand for headsets.

"The challenging macroeconomic climate is largely to blame for this year's lowered expectations, although it will not impact all vendors equally," said Jitesh Ubrani, research manager, Mobility and Consumer Device Trackers at IDC. "Sony's new PSVR2 and Apple's foray into the space will help drive additional volume while new devices from Meta and Pico, expected towards the end of 2023, will build momentum for VR in 2024. Meanwhile, on the AR front, consumer-facing brands such as Xiaomi, Oppo, and TCL are all expected to drive consumer awareness for the category over the course of the next 6-18 months."

The type of headsets that are expected to face the most challenges in terms of growth are standalone VR headsets. Apparently, these were popular items during 2020 and 2021 when many countries were locked down, this has led to unfavourable year-over-year comparisons. IDC says tethered VR and AR headsets will have an easier time of things in terms of growth due to a sluggish 2022.

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