Metaverse off to ominous start after VR headset sales shrank in 2022
Meta CEO Mark Zuckerberg demonstrates an Oculus Rift virtual reality (VR) headset and Oculus Touch controllers during the Oculus Connect 3 event in San Jose, California, U.S., on Thursday, Oct. 6, 2016.
David Paul Morris | Bloomberg | Getty Images
Over a year after changing his company’s name to Meta and committing to spend billions of dollars developing the metaverse, Mark Zuckerberg’s bet on virtual reality is no closer to paying off.
Sales of VR headsets in the U.S. this year declined 2% from a year earlier to $1.1 billion as of early December, according to data shared with CNBC by research firm NPD Group. Facebook’s advertising business generates that much revenue about every three days.
With the ad business mired in a slump, Zuckerberg has been looking to VR devices and related technology to pull Meta into the future. But data from analyst firm CCS Insight reveals that worldwide shipments of VR headsets as well as augmented reality devices dropped more than 12% year over year to 9.6 million in 2022.
Taken together, the estimates of VR headset sales and shipments create a problematic picture for Meta, whose stock price has lost about two-thirds of its value this year. Zuckerberg has said he’s playing the long game with the metaverse, expecting it take up to a decade to go mainstream and projecting it will eventually host hundreds of billions of dollars in commerce.
It’s not just Meta. Numerous venture firms and other tech companies have wagered big over the past decade on a futuristic world of virtual work, education, fitness and sports.
Meta’s Quest 2 headset, released in 2020, is by far the leader in the VR market, according to several analysts. Competing devices from companies like Valve, HP and Sony represent a small fraction of the market.
Sales of Meta’s flagship Quest device dropped in 2022, a decline that can be attributed to the device’s big year in 2021, said Ben Arnold, NPD’s consumer electronics analyst.
“VR had an amazing holiday in 2021,” Arnold said, referring to various promotions that helped boost sales of the devices at a time when gaming consoles like Sony’s PlayStation 5 were in short supply. “It was a great time last year to get one of these products, and VR totally crushed it.”
VR headset revenue in the U.S. doubled in 2021 from about $530 million in 2020, according to NPD.
A confluence of factors contributed to lower sales and shipments in 2022.
The Quest 2 has been around for a few years and, like any consumer electronics device, has lost some appeal as it’s aged. And while Meta released a new VR headset in fall, the Quest Pro, that device is geared toward businesses and costs $1,100 more than the Quest 2, pushing it even further out of reach for many VR enthusiasts.
Meta decided over the summer to raise the price of the Quest 2 by $100, citing inflationary pressures.
Leo Gebbie, an analyst at CCS Insight, said in an email that Meta’s price increase was a surprise “given that the company has been willing to sell the headset at such a low margin to try and drive uptake of VR and gain a high market share.”
Meta declined to comment about its VR headset sales or third-party estimates.
All eyes on Apple
Next year is expected to be another “slow year” for the VR market, CCS Insight said in its latest report, citing a weak economy and inflation.
Gebbie said “consumer budgets will be tightening,” and “non-essential purchases like VR headsets are likely to be the casualty of this.”
Sony’s next-generation VR headset will cost $550 when it debuts in February. Arnold said that while the PlayStation VR2 will “give the market kind of a shot in the arm,” it will likely not influence the overall VR market as much as the Quest 2 because Sony’s device requires owners to have a PlayStation 5 as way to power the headset.
Sony PlayStation VR2 headset
Sony
“The total addressable market of the PSVR2 is going to be PlayStation owners,” Arnold said.
A major question for next year remains whether Apple, as long rumored, will unveil a VR headset.
Apple could create a compelling VR headset with an accompanying software ecosystem, Arnold said.
Additionally, Apple’s reputation as a leader in consumer technology could provide a spark to the dim VR market, making the technology more attractive to the general public.
“If one company has the ability to transform the VR market overnight, it’s Apple,” said Gebbie. “With its hugely loyal fanbase, many of whom are comfortable with spending large amounts of money on technology, if Apple was to launch a headset we expect that it would perform very well.”
Apple is reportedly building a VR headset with AR features for a release as soon as 2023.
Eric Abbruzzese, a research director at ABI Research, said Apple could have success launching a VR headset geared toward businesses, which would likely help lure developers to the community. But the high price of an enterprise VR headset, which would likely retail for several thousand dollars, would still make it difficult for Apple to move the needle, Abbruzzese said.
“It probably won’t even ship 5 million units in its first year,” Abbruzzese said of an Apple enterprise VR headset. “But it is the first notable product from a huge tech incumbent.”
Apple didn’t respond to a request for comment.
One major thing the VR world lacks is a breakout hit, or a killer app.
Some games have gotten traction, like the musical rhythm game Beat Saber and VR versions of popular titles like Resident Evil, Abbruzzese said. And some users are showing more interest in using VR for fitness activities.
But in the console market, blockbuster games like FIFA and Call of Duty are “shipping hundreds of millions of products,” he said.
Meanwhile Meta’s Horizon Worlds social VR platform is still in its experimental phase.
“The only metaverse product really is Horizon and it’s not good right now,” Abbruzzese said.
WATCH: Meta has a tremendous future if it can just stop making mistakes
The Nasdaq MarketSite in New York, June 9, 2023.
Michael Nagle | Bloomberg | Getty Images
Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.
Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.
The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.
The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.
Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.
Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.
With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.
CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.
“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”
CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.
“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”
‘Cave rapidly’
During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”
A spokesperson for Andreessen Horowitz declined to comment.
Some techies who supported Trump in the campaign have taken to social media to defend their positions.
Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”
That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.
At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”
However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.
“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.
Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Stephen Brashear | Getty Images
Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.
Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.
When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.
Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.
C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.
Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.
“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”
— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports12 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway