On January 26th Beijing time, according to CNBC, Meta has shifted its focus from virtual reality (VR) to AI and smart glasses. This strategic adjustment has caused a chill in the entire industry and raised concerns about the future prospects of VR.
I can personally experience the feeling of entering the VR winter. ”Independent VR content creator Jessica Young stated that she specializes in creating content suitable for the Meta virtual social network Horizon Worlds.
Last week, Meta laid off approximately 10% of its employees in the Reality Lab department, with a focus on VR headset related projects such as Quest. The Horizon Worlds development team has been severely impacted, with some internal studios being closed. CNBC reported that the scale of layoffs this time is about 1000 people.
Formerly synonymous with VR
Considering the significant impact Meta has had on the industry since its acquisition of Oculus for $2 billion in 2014, the company's decision to reduce its VR investment is particularly noteworthy.
When Meta CEO Mark Zuckerberg changed the company name from Facebook to Meta, the company became synonymous with VR, representing Zuckerberg's persistent pursuit of the future of the digital world known as the "metaverse". Since the end of 2020, the Meta Reality Lab department has accumulated losses exceeding $70 billion.
Zuckerberg's sudden shift has caused some VR developers to worry about their future prospects. Although they believe that Meta will not completely abandon its VR business, a major transformation seems to be underway.
Meta typically releases new Quest VR headsets at its annual Connect conference in the fall, but the company has reduced its VR hardware release scale by 2025. Instead, Meta has launched the Meta Ray Ban Display glasses priced at $799, which come with a built-in digital display screen.
If Meta doesn't launch new headsets in the next year or two, the market will feel dull, "said independent VR content creator Jessica Yang." Actually, it's already a bit of a feeling now
Since the layoffs, Andrew Bosworth, Meta's Chief Technology Officer, has repeatedly emphasized publicly that the social media giant has not given up on the VR field.
We are still making significant investments in this field, but it is evident that the growth rate of VR has not met our expectations. Therefore, you need to ensure that the scale of your investment matches the actual situation. ”Bosworth said in an interview with the technology briefing 'Sources'.
Market shrinkage
Market research firm IDC pointed out in a report in December last year that the so-called Extended Reality (XR) device field is undergoing significant transformation. This category includes both VR headsets and mixed reality devices that allow users to switch between virtual environments and real-world views, as well as smart glasses equipped with AI and more powerful digital display glasses.
IDC predicts that XR device shipments will increase by 41.6% year-on-year to 14.5 million units in 2025, but this growth is not related to VR and mixed reality headsets, whose shipments are expected to decline by 42.8% to only 3.9 million units in 2025. The remaining XR categories are expected to achieve a year-on-year growth rate of 211.2%, with a shipment volume of 10.6 million units by 2025, including AI glasses with and without display screens.
Jitesh Ubrani, Research Manager at IDC, pointed out that the VR headset market is still a niche area that is only attractive to some gamers. He said that ordinary consumers seem to lack interest in wearing "dumb headsets" for VR experiences for long periods of time, which is far from the vision commonly expected by the technology industry about a decade ago.
The market has already given the answer, "Ubrani emphasized." Although specific niche groups will continue to use these headsets, they will not gain widespread market appeal
Andrew Eiche, CEO of Owlchemy Labs, a VR game studio under Google, stated that the notion that VR is about to experience a breakthrough similar to smartphones has always been a misconception. He compared VR headsets to iPhones as a 'strategic mistake'.
Aiqi pointed out that the VR market is more similar to the Atari classic game console model popular before the 1983 game market crash. It was not until the late 1980s that Nintendo's game console helped revive the market and laid the foundation for the entire industry to develop into a huge industry today.
Apple is not very helpful
Aiqi expressed optimism that Valve's upcoming Steam Frame wireless VR headset can help the market, and other recently released devices are also positive driving factors, such as Samsung Galaxy XR, which debuted in October last year, and Apple's Vision Pro.
However, Apple's entry into the VR field in February 2024 did not significantly change the market landscape. In January of this year, IDC reported that Apple's Chinese OEM partner, Lite On Precision, had stopped producing new Vision Pro headsets, indicating a lack of widespread demand in the consumer market.
Nevertheless, Ubrani stated that Apple's $3499 space computing headset has gained some foothold as a commercial tool. Apple has indeed done a good job in selling to large-scale developers, but they have also successfully entered some super large enterprise markets, "said Ubrani.
The remaining hope
For several quarters, Apple's performance in the enterprise market has indeed surpassed Meta's. ”Ubrani pointed out that this is partly due to Apple's rich experience in selling devices to businesses.
The enterprise VR market may not be as glamorous as the consumer market, but IDC believes that it is an "area that is growing slowly but showing an upward trend, as companies gradually realize that deploying these headsets can bring considerable investment returns.
As part of its reality lab layoff plan, Meta announced on its support page that it will terminate its Horizon hosting service for enterprises. This project mainly provides services for enterprises that use Quest headsets for internal tasks such as virtual employee training.
Meta failed to realize the potential of VR if they looked beyond gaming. ”RP1 CEO Sean Mann said. RP1 has developed a 'metaverse browser' for users to access virtual and AR environments.
As Meta reduces its investment in VR and transforms Horizon into a mobile online gaming platform similar to Roblox, independent VR content creator Jessica Yang stated that she plans to continue creating experiential content on the platform.
However, she stated that Horizon has lost its direction. It's frustrating to see people claiming it's gone before they've ever experienced or understood it as it is, "she said.
