How Meta is Dominating The AR/VR Market Amid Global Demand

Whilst digital transformation continues to impact the technology market, the augmented and virtual reality (AR/VR) sector stands as a battleground for tech giants and innovative start ups alike.

This market has increased to be about gaming and entertainment possibilities as well as broader applications across enterprise, healthcare, education and daily consumer interactions.

The journey of AR/VR technology, from its early experimental days to today's sophisticated mixed-reality experiences also shows a broader shift in how humans interact with digital information.

While the consumer market has seen various attempts at mainstream adoption over the past decade - from Google's early Glass experiment to PlayStation's VR gaming initiatives - it's only recently that the technology has begun to mature into genuinely practical and compelling consumer products.

Against this backdrop, Meta has risen to be a dominant force, leveraging its substantial research and development capabilities, along with its vast social media ecosystem, to pioneer new frontiers in what it terms the 'metaverse'.

However, as the market matures and new players enter the fray, the landscape is becoming increasingly complex.

New analysis from the International Data Corporation (IDC) provides insights into the current state of the AR/VR market, highlighting both the established leaders and emerging challengers who are shaping the future of immersive technology. 

Meta's dominance in the AR/VR market

Meta, has innovated up the ladder to be a clear leader in the AR/VR headset market.

According to data from the IDC Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, Meta captured a 70.8% market share in the third quarter of 2024.

The success of Meta's latest Quest 3 headset has been attributed to a broader content selection and promotional efforts, including participation in events such as Prime Day.

This strategy has helped the company solidify its position at the top of the AR/VR market.

Additionally, Meta's Reality Labs division, responsible for Quest headsets and its Horizon software platform, has seen a consistent increase in revenue compared to the previous year.

The company's focus on mixed reality capabilities in the Quest 3 has positioned it well in a market that is increasingly favouring versatile devices. 

Competition and market dynamics

While Meta leads the pack, other companies are vying for market share in the AR/VR space.

Sony for instance, known for its PlayStation gaming console, ranked second with a 6.7% market share, benefiting from attention from PC gamers and promotional activities for its PSVR2 headset.

Meanwhile, Apple, ByteDance and XREAL rounded out the top five manufacturers.

However, the commitment of some companies to the AR/VR market appears to be wavering.

Jitesh Ubrani, Research Manager at IDC, notes: "Sony and ByteDance's dedication to headset making seem to be wavering as shipments for both vendors continue to decelerate.”

This potential retreat from established players could create opportunities for newer entrants such as XREAL and VITURE, which are innovating in both hardware and software to appeal to gamers.

The market has become increasingly concentrated, with the top three players accounting for over 90% of the market share in Q2 2024.

This consolidation reflects the cooling of market frenzy and the challenges faced by smaller players in competing with established tech giants.

Future outlook and technological trends

Extended reality devices, which provide simple heads-up displays or content mirroring, are anticipated to be the next largest category after mixed reality headsets.

The competition in this segment is expected to intensify over the next 18 months, particularly with Google's re-entry into the market through Android XR.

Jitesh highlights the potential of AI-enhanced glasses: "Glasses combined with AI and a heads-up display can provide a powerful experience for both consumers and enterprises.”

This technology could open up new possibilities for both personal and professional use cases.

However, despite the current growth, the market faces challenges.

IDC forecasts that AR/VR headset shipments will decline by 8.3% in 2023, totalling 8.1 million units.

The introduction of new, higher-priced VR headsets may discourage some buyers, making them more accessible to wealthier consumers.

This trend could impact market adoption rates and influence the development of content and applications for these devices.

However, a strong recovery is expected in 2024, with a projected growth of 46.4% in headset shipments.

"With Google's re-entry into the market through Android XR, competition is about to heat up as neither Apple nor Meta has cemented themselves as a clear winner for the mass market," Jitesh concludes.

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