Meta Platforms Inc. is facing increased competition in the virtual reality headset market, as ByteDance Ltd. continues to make gains. ByteDance, the Chinese owner of TikTok, bought Pico, a Chinese startup that makes VR headsets, two years ago, launching a new front in the competition with Meta. Pico’s headset shipments have since jumped, making it a small but rapidly growing No. 2 to Meta in the global market, even though Pico does not sell its consumer headsets in the US.
Meta has been investing heavily in the metaverse, a more immersive version of the internet that will be experienced largely through virtual-reality headsets. The company has more than 200 apps on its VR devices that have generated over $1 million each in sales, according to its latest quarterly results. However, total revenue in Meta’s Reality Labs segment was down 17% in the quarter due to lower Quest 2 headset sales. A year ago, Meta held 90% of the market share, but that has since dropped to about 75%. Pico’s market share more than tripled over the same period to about 15%.
ByteDance’s entry into the virtual-reality headset market comes at a politically challenging time for the company. TikTok has been banned on federal government devices, and some Biden administration officials are trying to force the company to be sold to a US company. Pico offers headsets for personal use in Europe and Asia, where consumers have been more open to devices from Chinese companies. Consumers in these markets have gravitated towards Pico partly due to a $100 price increase that Meta introduced to Quest last year.
The competition in the virtual-reality headset market is expected to become more intense, with the market expected to become a $16 billion industry by 2026. Apple is expected to launch an augmented-reality headset later this year, and Microsoft offers a mixed-reality headset for businesses called HoloLens. Rolf Illenberger, CEO of virtual-reality software company VRdirect, stated, “The space is going to get crowded with competitors who have good arguments on their side. So, it’s going to be tricky for Pico.” A robust offering of apps is crucial for making VR platforms attractive, and Pico is still in the early days of expanding its catalogue.
In conclusion, Meta Platforms Inc. is facing increased competition in the virtual-reality headset market, as ByteDance Ltd. continues to make gains. Pico’s headset shipments have jumped, making it a small but rapidly growing No. 2 to Meta in the global market. The competition in the virtual-reality headset market is expected to become more intense, with the market expected to become a $16 billion industry by 2026. A robust offering of apps is crucial for making VR platforms attractive, and Pico is still in the early days of expanding its catalog.
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