After Pre-Orders Disappoint, Sony Slashes PlayStation VR2 Headset Output

After early pre-orders for Sony's PlayStation VR2 headset disappointed, the company has dramatically reduced its projections for the initial launch of the product. This signals little improvement for the hyped-but-unproven virtual reality sector.

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The company has halved its forecast for shipments of the PSVR2 this quarter, with only around a million units set for release on February 22. This is according to people familiar with Sony's deliberations. The company had previously aimed to have 2 million headsets ready for the launch quarter, but it seems that they will not be able to meet that goal. The PSVR2 is Sony's second-generation headset, and they had hoped to use it to drive user growth and adoption for VR. However, it seems that the lower than expected shipment numbers may put a damper on those plans.

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According to sources who spoke on condition of anonymity, the Tokyo-based electronics giant has told a supply partner to expect reduced display panel orders. The company is now planning to ship around 1.5 million units between this April and March next year, though that figure may be adjusted further in response to demand.
Sony shares fell after news broke in Tokyo on Tuesday, ending the day just below where they started.

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Although VR technology has been around for a while, it has not been adopted as quickly as initially hoped. One reason for this is the lack of titles that can showcase the technology. According to IDC estimates, worldwide shipments of augmented and virtual reality headsets are expected to grow 32% to 12.8 million units in 2022. The market is currently dominated by Meta Platforms Inc.’s Quest range, with nearly an 85% share. Sony does not rank among the top five providers and its first-generation PSVR has failed to secure even a 1% share.

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Sony began accepting PSVR2 pre-orders in November, but it soon relaxed conditions so that anyone wishing to buy the gadget could order one. The PSVR2 will work only with Sony’s PlayStation 5 console, which starts at $399. The headset is priced at $549. With less than a month to go until the PSVR2’s release, most stores are still taking pre-orders without a wait list — whereas hotly anticipated gaming gadgets are usually limited in supply at launch.
A Sony spokesperson declined to comment on the company's product inventory.

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According to analysts, the new headset's cost and incompatibility with other consoles will likely confine it to niche status. Unlike Meta, which has invested heavily in making VR more affordable and attainable, Sony's offering is deemed an effort to keep a footprint in the VR segment rather than truly expand it to new audiences.
According to Damian Thong, an analyst at Macquarie Capital, the PSVR2 will be nothing more than an expensive accessory for the PS5.
The weak demand is a setback for the VR industry. Meta's Quest 2 sales fell after the company raised the product's price and cut jobs in its hardware department, while Microsoft Corp. decided to scale back its HoloLens goggles business.

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Virtual reality headsets have long been seen as the next growth frontier for computing hardware and services, attracting interest from major tech companies like Alphabet Inc.'s Google and Apple Inc. Facebook founder Mark Zuckerberg has even rebranded his company's AR project, Meta, to signal his commitment to creating a VR metaverse. However, some of the most successful metaverse projects to date, such as Gree Inc.'s Reality, are not compatible with headsets at all.

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According to Kenji Fukuyama, UBS Securities analyst, current head-mounted displays are bulky and it can be difficult to stay motivated to use one on a daily basis. Additionally, the platform isn't attractive for software makers to create games for because sales aren't guaranteed to be strong. Augmented or mixed reality may end up being the future instead of virtual reality.

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Cooling consumer and market sentiment is not discouraging suppliers, according to Display Supply Chain Consultants co-founder Yoshio Tamura. Many component providers, especially display makers, continue to invest heavily in advancing optical technologies for use in goggles, including ones for Apple’s planned device launch later this year. Tamura believes that this continued investment indicates that suppliers are confident in the potential of the market for AR devices.
Tamura believes that the VR era is coming, but we're not quite there yet.