NEW YORK, June 1 (Reuters) – Meta Platforms (META.O) CEO Mark Zuckerberg unveiled the next-generation mixed reality headset, the Quest 3, on Thursday as the company prepares for Apple to launch a emerging market that Meta has dominated until now.
The device will start at $499, will be 40% thinner than the company’s previous headset, and will feature color mixed reality that combines augmented and virtual reality (AR/VR) elements, Zuckerberg said in an Instagram -Post ahead of Meta’s annual gaming conference.
Meta also announced that it will reduce the prices of its existing Quest 2 headsets while adding performance boosts for these devices to provide a smoother user experience.
The Quest 3 will have a new Qualcomm chipset with twice the graphics performance of the Quest 2, Zuckerberg said. He said the device will launch in the fall and promised more details at the company’s annual AR/VR conference on Sept. 27.
Zuckerberg’s announcement came less than a week before tech competitor Apple (AAPL.O) was due to unveil its first mixed reality device, a high-end product priced around $3,000, according to a Bloomberg report.
According to an estimate by market research firm IDC, Meta’s Quest 2 and Quest Pro devices accounted for almost 80% of the 8.8 million virtual reality headsets sold in 2022.
Far behind in second place with a 10% market share was the pico device from Chinese company ByteDance, which also owns social media competitor TikTok.
Still, despite its dominance, Meta is struggling to sell its vision of an immersive “metaverse” of interconnected virtual worlds and expand the market for its devices beyond the gaming community niche.
According to a Reuters tally, the company ranked eight of the top ten most popular apps in its Quest store in the gaming category.
After a spike in interest during the pandemic, headset sales plummeted in the first quarter of this year, with the overall AR/VR headset market down 54.4% year over year.
Revenue from Meta’s Reality Labs segments, which include headset sales, fell 50% year over year last quarter.
This puts Meta far behind on a trajectory once envisioned for the unit. A meta executive predicted in 2018 that the company’s metaverse would reach 100 million hardware units within a decade, half of which would be meta devices.
“By the end of the year there will be a slowdown,” said Jitesh Ubrani, a research executive who monitors the virtual reality market at IDC. “Up until now, VR has largely revolved around gaming. And I think gaming will remain the dominant use case going forward.”
Even in the gaming market, Meta is threatened by Sony, which dominates the console market with the PS5. Sony released its own second-gen headset for gaming, the PS VR2, in February and has significant developer support.
For now, Meta appeared to be entering that market by pairing its Quest 3 announcement with its annual gaming show, where the company showcased new ways for users to slay vampires and outwit evil robots in upcoming releases.
In March, Meta cut prices on most of its existing Quest headsets in hopes of stimulating demand after raising the price of the entry-level 128GB Quest 2 in July 2022.
The high-end Meta Quest Pro model is now around $1,000 (up from an introductory price of $1,500), and the 256GB version of the Quest 2 is now around $430 (down from $500). ).
The company announced Thursday that it would cut prices for the Quest 2 again starting June 4, with the entry-level device going back to its original price of $300 and the 256GB version going down to $350 .
To appeal to a larger mass audience, Zuckerberg has made forays into the fitness world in recent years, posting videos in which he uses meta-equipment while fencing with Olympic medalists and delivering punches with mixed martial artists.
He won a battle with US antitrust authorities to acquire the app developer behind VR fitness app Supernatural. During the trial, government prosecutors presented evidence that meta-executives had recognized fitness as a way to expand VR usage beyond the existing fan base, which consists mostly of young male gamers.
Zuckerberg also developed productivity tools to market the Quest headsets as virtual offices, including a partnership with Microsoft to bring apps like Teams and Outlook to the devices.
Reporting by Katie Paul; Additional reporting by Yuvraj Malik and Stephen Nellis; Edited by Lisa Shumaker
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