In 2021, 11.2 million units of augmented reality (AR) and virtual reality (VR) headsets shipped globally, according to new data from International Data Corporation’s (IDC) worldwide quarterly AR/VR headset tracker. During holiday Q4, half of the annual volume was shipped, capping a record year that hasn’t seen similar volumes since 2016 when low-cost VR screenless viewers like Samsung’s Gear VR dominated the market.

The dramatic growth was largely thanks to Meta’s strong Quest 2 volumes, which accounted for 78 percent of the combined AR/VR worldwide market. Followed by DPVR (5.1 percent) and ByteDance’s Pico VR products (4.5 percent), both of which are well-positioned for growth in Asian markets, notes the report. In fourth and fifth places were VR pioneer HTC and China-based online video platform iQIYI.

Meta has been leading the AR/VR space due to its offering of a reasonably priced headset. Its tactic of introducing non-gamers and businesses to the array of uses for AR and VR beyond gaming has also benefited the company, said Jitesh Ubrani, research manager for IDC Mobility and Consumer Device Trackers. 

Meta doesn’t currently have any major competitors in the AR/VR industry, though that’s likely to change in the next year or two when Sony launches its PSVR2 and Apple and other smartphone vendors enter the market.

AR/VR headset shipments are expected to grow just shy of 47 percent year-over-year in 2022, with double-digit growth into 2026, as global shipments exceed 50 million units that year. One explanation for this growth is the broader adoption of AR and VR by gamers, non-gamers and the commercial sector. IDC predicts the industry’s compound annual growth rate will exceed 35 percent by the end of 2026.

Augmented reality headsets continue to represent a small fraction of the overall AR/VR headset market and the volumes we do see are happening almost exclusively on the commercial side of the business. Consumer AR is still largely the domain of smartphones and tablets and will likely remain so in the near term,” said Tom Mainelli, group vice president, Device & Consumer Research at IDC. 

AR is on the road to becoming a must-have for marketers, much like influencer marketing became indispensable to successful cross-channel marketing strategies in recent years. Emarketer expects ad revenues from AR marketing to reach $2.86 billion in 2022 and $6.68 billion in 2025–up from $1.98 billion currently. 

Thirty-five percent of marketers were leveraging AR or VR in their strategies in 2021. Of those marketers, 42 percent planned to increase their investment in 2022. And a tenth of those who didn’t leverage AR or VR in 2021 will experiment with it for the first time this year.

The overall AR/VR market is expected to grow to $252.16 billion by 2028, up almost $200 billion from 2021, according to a report by The Insight Partners. Some predictions go as high as $571 billion by 2025. The hardware alone will account for more than half of the projected spending.

Marketers looking to meet people where they are should keep a close eye on the space, as one emerging use case for AR/VR headsets is the metaverse.  The new digital environment will give brands new ways to engage customers through immersive experiences and shopping activations to highlight their latest products and services. Whether it’s shopping for a Gucci wearable for their avatar in the brand’s virtual plot of land in The Sandbox, bidding on artwork from Sotheby’s auction in Decentraland, or customizing skate shoes in Van’s Roblox skatepark

People are steadily warming up to the idea of shopping with AR, though it hasn’t become mainstream just yet. According to eMarketer’s October 2021 survey with Bizrate Insights, just 13 percent of US adults had ever used AR or VR to shop, up by 5 percentage points YOY. But 37 percent who hadn’t used AR or VR to shop before were at least somewhat interested in doing so.

Discussion of the metaverse is driving hype and investment around AR, VR and many adjacent technologies, but Maneilli doesn’t expect this insignificant behavior to impact headset volumes any time soon.