AR/VR Headsets May Heat Up Until 2027 despite This Year's Slower Growth

Since its launch in 2016, augmented and virtual reality headset sales have risen rapidly.

According to analysts at IDC, the market for augmented and virtual reality (AR/VR) headsets will grow less rapidly in 2023 than anticipated. The company forecasts 10.1 million headset shipments globally this year, up 14% from 2022. Nonetheless, the estimated 32.6% cumulative annual growth rate (CAGR) for 2023–2027 indicates that demand may rise in the next few years.

The epidemic has significantly influenced the education sector, where remote learning is now standard practice. Students who want to learn new information and interact with classmates in an immersive fashion are more interested in AR/VR technology.

Gamers also use AR/VR headsets for gaming as they search for more immersive experiences beyond conventional controller-based gaming systems. VR headsets give consumers a more lifelike gaming experience thanks to increased graphics and sound quality.

Furthermore, businesses are also starting to explore how AR/VR technology can be used for training purposes or even as tools for remote collaboration between teams in different locations worldwide. It could open up opportunities for headset makers who can provide solutions tailored towards such use cases.

Overall, while the current economic conditions are suppressing demand for AR/VR headsets, there is potential for growth in the coming years if manufacturers can create products that meet customer needs both from a price point and features perspective.

As we head into 2024, virtual and augmented reality technology improvements are expected to continue despite the challenging economic environment. While several consumer-facing firms, like Xiaomi, Oppo, and TCL, intend to increase awareness of augmented reality over the next 12 to 18 months, Sony's debut of their PSVR2 system will be a significant step forward for VR adoption.

However, because of the difficult market conditions, standalone VR headsets might see certain growth limitations. The demand for standalone VR headsets increased during the lockdowns of 2020 and 2021 as individuals looked for ways to pass the time at home. It created an unfriendly climate for comparable growth rates in 2022; instead, IDC forecasts that tethered VR and AR headsets will be more successful due to sluggish sales numbers this year.

Furthermore, the development of 5G technology has enabled wireless VR capabilities. The new tech will reduce latency and provide more immersive VR headsets experiences. It could be a powerful catalyst for the wider adoption of virtual reality headsets in 2022, as it makes them easier to use and sets them apart from their tethered counterparts.

The year 2022 is shaping up to be crucial for virtual reality and augmented reality applications, with many industry insiders seeing a boom in usage mostly because of the developments in 5G technology. To capitalize on this technology, businesses will probably release new VR and AR goods, while existing hardware producers will focus more on enhancing the headgear experience.

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