Apple Inc.’s first groundbreaking hardware product in nearly a decade, a mixed-reality headset expected in June, should jolt a flagging metaverse market — but it will not necessarily revive it overnight.
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executives are cautious about sales of the $3,000 headset, which will reportedly be called Reality Pro or Reality One. They expect to sell about 1 million of the headsets in the first year, or $3 billion worth, according to a Bloomberg report. That would put the headset on a similar trajectory as the Apple Watch —itself hardly a hit product out of the gate.
“Any metaverse device launched into the consumer space is likely to struggle for traction given the likely high price point and the lack of content available for the platform,” Richard Windsor, an analyst at Radio Free Mobile, said in a note Monday. He added that the device is unlikely to make a tangible difference to Apple’s bottom line.
The technology has yet to catch on, Windsor told MarketWatch, because it has so far been unable to “deliver a decent user experience.”
The entry of Apple into any market — think phones and watches — legitimizes that market with consumers. But the metaverse, which has been long in gestation and has yet to break through with the general public despite years of hype, isn’t a typical market.
Hardware sales have lagged amid a dearth of apps, prompting Meta Platforms Inc.
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this month to slash the price of its Oculus headset. Facebook’s parent company is also in the midst of a second round of layoffs to cut costs following criticisms that it spent too lavishly on its metaverse push. Meta’s Reality Labs generated almost $2.2 billion in 2022 revenue but endured an operating loss of $13.7 billion.
Meta isn’t alone in seeing disappointing metaverse-related revenue.
An estimated 8.8 million augmented- and virtual-reality headsets shipped last year, a drop of 21% from 2021, according to an IDC report last week. The market-research firm had forecast annual sales of about 9.7 million units a few months earlier.
“The decline was not completely unexpected, given the limited number of vendors in the market, a challenging macro-economic environment, and a lack of mass market adoption from consumers,” IDC said.
And yet vendors continue to pursue metaverse riches, based on some optimistic market research.
Emerging metaverse opportunities in videogames, hardware, commercial software and services, e-commerce, advertising and other segments will produce $52.39 billion in annual revenue by 2027, according to an S&P Global Market Intelligence report last week.
Videogames will drive 41% of the annual metaverse revenue by the end of the forecast, S&P Global Market concluded, as publishers and platform holders “embrace the potential of persistent digital identities buying virtual goods to use across an array of settings and game modes.”