IDC Downgrades 2023 AR/VR Projections, but Sees Long Term Success

There is good news and bad news for the augmented reality/virtual reality (AR/VR) category, according to an AR/VR forecast from International Data Corp. (IDC).

The bad news is that 2022 results were weaker than anticipated and the firm lowered its 2023 shipment estimates to 10.1 million units. The good news is that even at the lower growth projection, the category would grow 14% during the year. On top of that, 2023-2027 projections call for a compound annual growth rate (CAGR) of 32.6%.

The category’s dynamics that led to the reassessment resulted, to some extent, from the category being a victim of its own success. AR and VR were so popular in 2020 and last year that it led to an unfavorable year-over-year comparison. IDC added that the tethered VR and AR glasses headset sector has an easier path to percentage growth “due to the dearth of volumes in 2020.”

“Consumer VR usage has dominated the AR/VR market, but growing consumer interest in AR is starting to reshape that segment,” Ramon T. Llamas, the research director for IDC’s Augmented and Virtual Reality research team, said in a press release.

“Historically, commercial users have led the AR segment with training and field service applications. But with the advent of lighter form factors, brighter displays, crisp sound, and a growing list of titles, early adopters have swung the pendulum in the other direction. Combined with the widespread popularity of gaming for VR headsets, consumer usage will lead both segments even as the case for commercial usage grows.”

Jitesh Ubrani, IDC’s research manager for mobility and consumer device trackers, said that the new Sony PSVR2 and Apple products will drive volume and new devices from Meta and Pico that are expected to build momentum going forward. Consumer-facing AR firms including Xiaomi, Oppo and TCL are expected to drive awareness during the next six to eighteen months, he said.

Facebook’s reincarnation as Meta and the company’s new focus on AR/VR may be driving interest in the technologies. Last June, the company said that it sees the need for a new peering infrastructure to support the metaverse and immersive virtual shared experiences, which could be an opportunity for network operators.

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