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Report: Economic uncertainty dampens VR, AR outlook

July 7, 2022

With the expected launch of several new augmented reality (AR) smart glasses, some before the end of 2022, alongside a year of record sales for virtual reality (VR) headsets, the next 12 months are shaping up to be a very important period for sales of immersive devices.

CCS Insight’s latest forecast outlines an expectation of 14.3 million VR and AR device shipments in 2022, an annual rise of 30 per cent. Although this’ll be a record-breaking year for device shipments, the market isn’t expected to be immune from the current macroeconomic difficulties. But despite wallets being stretched, VR and AR devices are expected to remain high on technology wish lists — particularly for enthusiasts and early adopters.

Although the long-term outlook remains rosy, we now predict adoption in 2022 to be lower than previously forecast. Increases in the cost of living worldwide will result in people rethinking their spending. But the appetite for new technologies will remain strong, with immersive tech benefiting, if only modestly.

VR headsets will retain the bulk of demand for immersive technology in 2022, accounting for 93 per cent of device shipments. Sales in the successful standalone headset category will continue to grow, with Meta’s Quest 2 as the crown jewel in this range of products. Buyers remain most interested in no-fuss wireless products, a major selling point of Meta’s Quest line-up.

One downside to the VR market forecast in 2022 is the expected delay to the launch of Sony’s latest PlayStation VR headset. Despite eager anticipation that the upgraded PlayStation VR2 will bring next-level console gaming content to VR headsets this year, it appears we’ll now have to wait until 2023. The delayed launch will result in pent-up demand for the upgraded headset — producing a 76 per cent rise in sales of VR devices that tether to a PC or console in 2023.

AR is set to see a strong boost in 2022, with device shipments increasing by more than 100 per cent and then a further 300 per cent in 2023. The arrival of new smart glasses in late 2022 and throughout 2023 puts AR devices on the cusp of becoming an everyday technology. Although the size of the market will be modest in the next few years, early adopters will pave the way for wider use.

Much of the expected growth for immersive technologies will stem from consumer markets, but the effect of Covid-19 on the use of VR and AR devices in enterprise shouldn’t be overlooked. The pandemic pushed businesses to realise the benefits of immersive devices, and sales of VR and AR headsets to enterprises are set to hit 2.6 million in 2022 — a 30 per cent annual rise. The changing nature of work in the pandemic led to businesses testing the deployment of immersive technology for a range of new applications. Despite the return of some pre-pandemic working trends, immersive technology in the workplace is here to stay.

The combination of uptake from businesses and consumers, alongside a strong product portfolio of VR headsets, AR smart glasses and advanced enhanced AR headsets, is set to create a winning formula as talk of the metaverse attracts investment in immersive content. CCS Insight forecasts 87.7 million VR and AR device shipments in 2026, with standalone VR headsets remaining the leading product and AR smart glasses quickly gaining pace.

Categories: Articles, Equipment, Markets, Research, VR

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