NEEDHAM, Mass.,  – The decline in worldwide shipments of augmented reality and virtual reality (AR/VR) headsets continued during the second quarter of 2024 (2Q24) as volumes contracted 28.1% year over year to 1.1 million units, according to International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker.

The decline is expected to carry forward as full-year shipments are forecast to fall 1.5% in 2024 before the market soars to 41.4% growth in 2025 thanks to new tech and more affordable devices.

The first quarter of 2024 was marred by a weak economy, upward momentum of average selling prices (ASPs), and excess inventory, in the case of a major player, Sony. During the second quarter, many of these issues were alleviated, though prices remained elevated. Meta led the pack with a 60.5% share during the quarter, followed by Sony, Apple, ByteDance, and XREAL.

“In recent quarters, mixed reality (MR) headsets took a leap forward in fidelity, first with the launch of the Quest 3 and later the Vision Pro,” said Jitesh Ubrani, research manager, Worldwide Mobile Device Trackers at IDC. “However, the lack of affordable options has meant that few consumers have experienced this new technology, but that will change as Meta is expected to launch a more affordable version which will help the market return to growth in the coming year.”

Extended reality (ER) headsets are also forecast to grow thanks to the inclusion of artificial intelligence (AI) and consumer-friendly designs. “Similar to the early days of this industry, we’re seeing a slew of new startups and next-generation products from established brands targeting the ‘smart glasses’ space. What’s different this time around is the inclusion of AI along with thinner and lighter designs catering to consumers,” added Ubrani.

Augmented reality devices are also expected to drive growth although shipment volumes will remain low as the tech has proven to be quite difficult to produce at scale while also overcoming barriers such as price, fidelity, battery life, thermals, and optics. Existing AR champions such as the HoloLens are also expected to give way to mixed reality devices in the future as some of the use cases can be fulfilled by this new class of headsets which will also be more affordable.

In total, IDC expects the industry will grow from 6.7 million units in 2024 to 22.9 million in 2028 with a compound annual growth rate (CAGR) of 36.3%. Benefitting from the confluence of both AR and VR, MR devices are expected to lead, representing over 70% of the volume in 2028. Meanwhile, ER devices, with a simple heads-up display or content mirroring, will capture over a quarter of the market.