AR & VR Headsets Market Insights

AR/VR Headsets Surged During the Holiday Season 2023; Robust Growth in Forecast Fueled by the Rise of Mixed Reality

As macroeconomic pressures eased and new products launched, the global market for augmented reality and virtual reality (AR/VR) headsets grew 130.4% year over year during the fourth quarter of 2023 (4Q23), according to new data from the International Data Corporation Worldwide Quarterly Augmented and Virtual Reality Headset Tracker.

"After losing share to Pico and later Sony a few quarters ago, Meta's share has been on a steady climb thanks to its ongoing subsidization of hardware and the launch of the Quest 3," said Jitesh Ubrani, research manager, Mobility and Consumer Device Trackers at IDC. "While Apple's entrance as well as newer devices from other vendors in this space certainly adds pressure, Meta's lead will likely remain unchallenged during the year as the company's low-cost, high-volume strategy will separate it from the rest of the pack."

For the full year of 2023, shipments of AR/VR headsets were down 23.5% from 2022 levels. Macroeconomic uncertainty put downward pressure on demand during the first half of the year and most companies relied on legacy products that had already been available for at least a year, leading to double-digit declines. It was not until key regions began seeing economic recovery and new products were launched that the market started to rebound, but not enough to offset the first half declines.

"2023 began in much the same way that 2022 ended: with a series of significant year-over-year declines," noted Ramon T. Llamas, research director with IDC's Augmented Reality and Virtual Reality program. "This reflected the situation in many other markets, and AR/VR was not immune to them. However, this did allow companies throughout the ecosystem to further hone their experiences with mixed reality, artificial intelligence, and display technologies to prepare for a better 2024."

While global shipments declined in 2023, 2024 is shaping up to be a year of recovery as shipments are forecast to surge 44.2% to 9.7 million units. New headsets such as Apple's Vision Pro and additional launches towards the end of the year will help drive growth as macroeconomic conditions improve across the globe.

"Apple's launch of the Vision Pro grabbed a lot of headlines and has raised awareness for AR and VR and although it's priced out of reach for most, it is helping raise the bar for competitors," said Jitesh Ubrani, research manager, Mobility and Consumer Device Trackers at IDC. "Along with Apple, many companies such as Meta and others have already begun their journey, transitioning from VR to Mixed Reality; ultimately laying the groundwork for true AR experiences."

Virtual Reality headsets are forecast to reach 24.7 million units by the end of 2028, representing a five-year compound annual growth rate (CAGR) of 29.2% as the consumer base slowly grows beyond core gaming use cases and as businesses adopt more headsets for training, design, and more. Meanwhile, Augmented Reality headsets will grow from a smaller base of less than a million units in 2024 to 10.9 million in 2028, representing an 87.1% CAGR over the same period.

"It will be exciting to watch how the market will evolve from today's experiences and how end-users will adapt to them," added Ramon T. Llamas, research director with IDC's Augmented Reality and Virtual Reality program. "Mixed reality (commonly referred to as MR, the ability for users to toggle between augmented and virtual reality) has been the exception and not the norm, but Apple has shone a bright light on MR with the Vision Pro. Next, look at how companies will increasingly incorporate artificial intelligence to analyze data and generate virtual content for the user. Finally, display technology will move from content consumption to content interaction with more sophisticated sensors and displays."

Data table for "2023 Q4 Historical ARVR Market Share" chart

Quarter	2022Q4	2023Q1	2023Q2	2023Q3	2023Q4
Meta	35.2%	47.8%	50.1%	55.1%	62.2%
Sony	data not available	35.9%	27.2%	16.0%
ByteDance	33.3%	6.1%	9.6%	6.4%	6.4%
DPVR	4.5%	1.7%	2.2%	2.2%	1.8%
Xreal	7.0%	1.3%	2.5%	4.2%	4.7%
Others	20.0%	7.2%	8.4%	8.8%