VR's Pandemic Winter: Oculus Quest Only Now Reaches 1 Million Unit Install Base, According to SuperData, Which Downgrades HMD Sales Forecasts

The numbers from Nielsen analytics company SuperData seem to welcome us to VR's winter season:

The growth outlook for augmented and mixed reality (AR/MR) headsets has been revised downward due to Q2 setbacks for consumer AR/MR. We now estimate that AR/MR headsets will only account for 23% of XR revenue by 2023, down from a prior projection of 36%. Magic Leap experienced mass layoffs after it failed to appeal to consumers or developers of consumer software. The company has now pivoted to focus on enterprise customers. Similarly, smartglasses maker North was acquired by Google, reportedly for less than the firm had raised in venture funding. There are reports Apple is testing AR devices, and a product from the company will certainly grow the consumer AR market overnight. However, we believe a consumer AR headset from Apple will not arrive until 2022 at the earliest and will take some time to reach true mainstream adoption. 

More here. While SuperData also reports that the Quest outsold the PSVR in Q2 2020 (the second quarter since Q4 2019 that this has happened), the Quest install base remains surprisingly now:

As of now, SuperData just confirmed with me directly, the Oculus Quest install base is roughly (and only) 1 million. Almost exactly a year ago, Quest sales were strong enough that it was on track to reach a million by the end of 2019.

Why the slowdown? The pandemic seems to be the key reason -- not just because location-based VR experiences are now closed for obvious reasons. More key, as I wrote yesterday, is that the pandemic now prevents the best (only?) way to sell VR headsets to inexperienced consumers:

It's really the paradox of virtual reality: Convincing people it's a powerful technology means spending quite a lot of time physically touching them in real life... but you're still in close contact with one or more strangers throughout a typical VR demo, sharing the controllers, holding and positioning people around so they're tracked properly, often literally holding hands with them, so you can make sure they're properly clicking the proper controls... 

[But] if we can't convince consumers to try VR by physically putting it on their heads -- let alone convince them to spend $400+ dollars on a product they've never before tried -- what other way is there to reliably grow the market?

So if that interpretation is right, we shouldn't expect HMD sales to pick up any time soon. (Especially during an economically fragile time when so many consumers are very leery of buying high-end technology products.)

Then again, to give these numbers a positive spin, 1 million Quest units is more than decent enough an install base for low budget indie developers looking to create the next Beat Saber or SuperHot for the Quest marketplace. And with so many of us sheltering in place, in need of entertainment that seems to takes us outside, the pandemic is probably helping driving software sales for people who already own a Quest.

[But] if we can't convince consumers to try VR by physically putting it on their heads -- let alone convince them to spend $400+ dollars on a product they've never before tried -- what other way is there to reliably grow the market?

So if that interpretation is right, we shouldn't expect HMD sales to pick up any time soon. (Especially during an economically fragile time when so many consumers are very leery of buying high-end technology products.)

Then again, to give these numbers a positive spin, 1 million Quest units is more than decent enough an install base for low budget indie developers looking to create the next Beat Saber or SuperHot for the Quest marketplace. And with so many of us sheltering in place, in need of entertainment that seems to takes us outside, the pandemic is probably helping driving software sales for people who already own a Quest.

Comments

[Metacam]

Oculus should do what they do for phones, where you pretty much pay an installment each month and when the new version comes out you can easily upgrade. I can't toss $400 for a luxury item that I know is likely going to have a better version coming. I don't even know if my PC would be able to handle VR good either that's another investment.

[FlipperPA]

This is really bizarre, because it has been next to impossible to get a Valve Index or Oculus Quest - the best PC unit and the best standalone. There just not inventory. Is it some kind of supply chain problem? I've had several colleagues ask about getting united since the pandemic started, and if they're not gamers, I recommend the Quest since they don't have gaming PCs. But it has been sold out.

The Quest is still mostly sold out or backordered, even months later:
https://www.oculus.com/quest/where-to-buy/?locale=en_US

And the Valve Index you order today will arrive in a few months:
https://store.steampowered.com/sub/354231/?purchase=354231

"Notice: Due to high demand your current estimated ship date is more than 8 weeks."

Something doesn't add up.

[Adeon Writer]

Can't sell it when you can't make them. I had to wait 4 months for mine.

Worth it though.

[TonyVT Skarredghost]

When the Quest launched, we all predicted 1-2M sales of the device. So what is the problem? It is not that different from what we expected...