Charting the Course for the Year Ahead: Trends of 2023 and Predictions for 2024

The year 2023 was a pivotal one for the XR industry, and we have much to benefit from many changes that occurred. We have seen an accelerated pace of innovation, significant financial investments, and strategic shifts that hint at the growing maturity of the market.

In this article I am offering a summary of the journey throughout the year, and a panoramic view of the key events, developments, challenges, and opportunities that have shaped the industry's trajectory and, I believe, set the tone for the upcoming year of 2024.

A Year of Contrasts in the Immersive Tech Sector

We started off 2023 with news regarding efforts around open metaverse, signaling an industry-wide move towards collaborative approaches to developing XR technologies. At the same time, there was a slight dip in VR headset sales indicating the market's volatility and the need for innovation to spur consumer interest. The winter season also meant substantial losses for VR research activities at Meta’s Reality Labs, which was followed by a change of tune due to sales of nearly 20M for Quest headsets, pointing at a widespread consumer adoption of VR.

Spring and summer months brought about new product launches and strategic maneuvers for virtual worlds on a governmental level. As the year progressed, the industry saw a mixture of setbacks and advancements. Yet, the increased activity in XR events and the continuous investment in immersive experiences, as evidenced by ticket sales and virtual item purchases, highlighted the sector's vibrancy. At the end of the year we concluded with significant strategic shifts and the consumer market's response to various products illustrating the ongoing consumer interest and market potential of XR technologies.

These are the key events that formed the overall yearly ambiance, month by month:

January

February

March

April

  • Metaverse Fashion Week concludes with following statistics:

    • 200% increase in Decentraland’s sales volume (Dapprader). Participating companies continue harnessing power after the event.

    • The number of the Fashion Week visitors was 3500 on the first day (GEEIQ)

    • Mostly benefited: Adidas, Tommy Hilfiger

  • TechNET Immersive finds that 24% of people believe that VR/AR skilly will be shortly applied in the tech sector in United Kingdom

  • Apple announces announcement (yes, you read it correctly) of its headset in June

May

June

July

August

September

October

November

  • VR is now on International Space Station

  • The Social VR Survey took place, revealing that:

    • 41% of users have fallen in love in VR based on personality

    • Almost 100% users pay for content in VR, with 18% spending more than $700/year and42% purchasing a physical product via VR

    • The three most popular VR communities are fashion-, music- and party-/chat-related

December

Opportunities and Obstacles — Summary of 2023 Trends

The year 2023 saw both opportunities and challenges for the immersive tech sector. On the one hand, positive developments like the Open Metaverse Foundation and substantial Quest headset sales indicated growing collaborative efforts and mainstream consumer interest in VR. Significant investment and technological innovations from companies like HTC and Sol Reader also showed a commitment to advancing the hardware and software. 

However, we have had heavy market fluctuations exemplified by an early dip in headset sales alongside major losses and project discontinuations at Meta and Google, which (unsurprisingly) still point at the sector's volatility and uncertainties.

Both government organizations and large corporations getting involved through projects, partnerships and launches help immersive technologies being taken more seriously as a future platform. Still, setbacks highlighted the risks faced by businesses operations. Overall, consumer engagement trends on platforms and with various headsets showed a rising comfort with virtual experiences amongst the general audience, the industry developments in 2023 was a mixed bag – signalling both mainstreaming opportunities and obstacles that are still ahead of us.

The Path Ahead — the 2024 Prediction

By all indications, 2024 will be an important year for the maturation and mainstreaming of immersive technologies. Having overcome the uncertainty and turbulence of recent years, the XR industry seems to be positioned to enter a phase of consolidation and clarity around its long-term vision and direction. 

These are my predictions for the upcoming year:

  1. Once open metaverse initiatives gain momentum, we will likely witness greater cooperation between major platforms to advance interoperability and data portability. This will allow users to gain accessibility across different ecosystems. Companies that have bet big on the metaverse through substantial investments in hardware, software and content will aim to establish leadership by defining interoperability standards and building virtual economies.

  2. We can expect to see further strategic partnerships and mergers between industry giants as they race to dominate the landscape and secure their positions. Aggressive competition will continue, and collaboration will be necessitated by the enormity of the challenges and opportunities involved in realizing the open metaverse at scale.

  3. As integration increases, more organizations from various sectors will explore immersive technologies to transform how they operate and deliver value. Virtual and augmented reality solutions will see broader uptake in industries like education, healthcare, manufacturing and beyond due to their potential for simulation, training and remote collaboration. Established use cases will mature in 2024 while novel applications will be pioneered.

  4. A deeper understanding of human factors and technical capabilities will drive the UX debate to the forefront. Next-generation AR and VR devices will push the boundaries of comfort, mobility, fidelity and sensory immersion. Ease of use, accessible entry points and compelling content will remain core to attracting mainstream consumers. Addressing these will be done through innovative design and offering affordable options as a critical move for driving further adoption.

  5. Regulatory developments around data privacy, identity, content and digital well-being will likewise become important as more people spend significant time and parts of their lives in virtual spaces. Development of appropriate guardrails and governance models will be essential to realizing the societal benefits of the metaverse.

Overall, the trends point to 2024 serving as a transitional period signifying both the maturing promise and persisting challenges for XR.

Title image credit: Pi-Slices

 
Petra Palusovavirtual reality, metaverse, product development, trends, extended reality