Market Overview

Despite a Sharp Decline in VR Headset Shipments in Q2 2018, the Market Outlook Remains Positive, Says IDC

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Worldwide shipments of virtual reality (VR) headsets were down 33.7%
year over year in the second quarter of 2018 (2Q18), according to the
International Data Corporation (IDC)
Worldwide
Quarterly Augmented and Virtual Reality Headset Tracker
. IDC expects
this to be a temporary setback as the VR market finds its legs. The
arrival of new products, such as the Oculus Go and HTC Vive Pro, and new
brands, combined with the need for greater headset fidelity all point to
a positive outlook for the quarters ahead.

Screenless viewers brought a lot of attention to VR in the early days as
the entire market was artificially propped up by brands like Samsung,
Alcatel, and Google that bundled the headsets with smartphones. However,
since then, the screenless viewer category has declined substantially,
shrinking from 1 million headsets in 2Q17 to 409,000 in 2Q18. This
category was the largest contributor to the decline in shipments for the
overall VR headset market.

Tethered VR headsets declined 37.3% in 2Q18 largely because major brands
like Oculus and Sony were unable to maintain the momentum established
during a period of price reductions in 2Q17. As a result, the two brands
managed to ship 102,000 and 93,000 headsets respectively in 2Q18. The
category leader, HTC, shipped close to 111,000 headsets (excluding the
standalone Vive Focus) thanks to the growing popularity of the Viveport
subscription service as well as the launch of the Pro headset.

Standalone VR headsets grew 417.7% during the quarter, largely due to
the global availability of the Oculus Go/Xiaomi Mi VR, which managed to
ship 212,000 headsets.

While the consumer side of the VR headset market remains the focus of
attention, the commercial side has seen pilots and large-scale
deployments gaining traction. In 2Q18, roughly 20% of VR headsets were
destined for the commercial sector, up from 14% in 2Q17. Along with the
increase in share, average selling prices (ASPs) have also increased
from $333 to $442 during the same period.

"One of the major issues with the VR market is that consumers still find
it difficult to try a VR headset," said Jitesh
Ubrani
senior research analyst for IDC Mobile
Device Trackers
. "This is where the commercial market has an
opportunity to shine. HTC's recent partnership with Dave & Busters or
Oculus' work with schools around the world stand to play an important
role in educating and enticing consumers to use VR."

"In a market where mainstream VR content is still lacking, a growing
number of vendors are looking to commercial as a way to build their
business while they wait for the consumers to catch up," said Tom
Mainelli
, program vice president, Devices and Augmented
and Virtual Reality
at IDC. "These vendors are moving beyond
entertainment-focused B2C deployments to real-world training scenarios
in companies of all sizes, all over the world. IDC expects commercial
buyers to represent an increasingly important percentage of the market
going forward."

About IDC Trackers
IDC
Tracker
products provide accurate and timely market size, vendor
share, and forecasts for hundreds of technology markets from more than
100 countries around the globe. Using proprietary tools and research
processes, IDC's Trackers are updated on a semiannual, quarterly, and
monthly basis. Tracker results are delivered to clients in user-friendly
excel deliverables and on-line query tools.

For more information about IDC's Worldwide Quarterly Mobile Phone
Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC
International Data Corporation (IDC) is the
premier global provider of market intelligence, advisory services, and
events for the information technology, telecommunications, and consumer
technology markets. With more than 1,100 analysts worldwide, IDC offers
global, regional, and local expertise on technology and industry
opportunities and trends in over 110 countries. IDC's analysis and
insight helps IT professionals, business executives, and the investment
community to make fact-based technology decisions and to achieve their
key business objectives. Founded in 1964, IDC is a wholly-owned
subsidiary of International Data Group (IDG),
the world's leading media, data and marketing services company. To learn
more about IDC, please visit www.idc.com.
Follow IDC on Twitter at @IDC.

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of their respective holders.

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