Excitement for extended reality devices (the catch-all term for virtual reality, augmented reality, and mixed reality products) reached a fever pitch early this summer, with announcements of long-anticipated new products from Apple, Meta, and others. The attention the category is receiving is rightfully earned — VR was the last hit product in tech, selling more than 9 million units in 2021 and 2022 — and all eyes are on this market to lead the consumer electronics sector out of its current sales decline. VR offers users unique experiences that are not offered by other consumer electronics products and, as Circana’s resident VR fanatic, I’m looking forward the next wave of extended-reality devices that will hit retail shelves this year.
VR sales in 2023 have been significantly lower than last year, with unit sales declining by 70%. Higher prices last summer contributed to the decline in unit-sales volume. Increased supply of current-generation game consoles has had an effect, as well, challenging VR for a portion consumers’ technology spending. The biggest challenge confronting the market for VR and other mixed reality devices, however, is the lack of new, innovative products. The relatively few new headsets released over the past 18 months have focused more on niche audiences, like VR users in enterprise settings or PS5 owners in the case of Playstation VR 2. The MR market is in search of a device that will be universally adopted.
The launch of new products from Apple and Meta importantly will broaden the selection of devices consumers have to choose from. With new hardware designs and updated specifications, there are more premium, mid-tier, and entry-level products available to suit a wider array of preferences and budgets. New findings from the Circana Connected Intelligence Wearables Ownership Report confirm that men aged 25 to 34 are twice as likely to own a VR headset than the average consumer to own a VR headset; this group is also the most likely to report purchase intent for VR products (54%). The addition of new extended reality products and applications could potentially entice a different user than the young early adopters who are typically drawn to new technology products.
Though VR headsets and smart glasses will not appeal to every consumer, our current fascination with the Metaverse and other immersive digital environments requires participation from users of many stripes. With an expanding market of devices, consumers have more options to experience this technology and its appeal should grow. The market for extended reality devices will only get more crowded from here — brands that deliver the best experiences and capture the most engaged audiences will win.