By Li Panpan

(JW Insights) Oct 13 -- China's VR market shipments declined significantly by 56% year on year in the first half of 2023, according to the latest data from Counterpoint released on October 12.

This marked the end of the Chinese VR market's two-year growth streak, spanning 2020-2022 and reverting to stagnation. The decline in China appears to be more severe than that observed in the global VR market, which fell 39% year on year in H1 2023.

The subdued market demand in China can be attributed to several factors in Counterpoint's analysis.

Firstly, the market's growth over the past two years was largely driven by the extensive marketing efforts of China's leading VR player, Pico. Since 2023, Beijing-based Pico has chosen to strategically scale back its marketing investments to ensure its operations are more stable amid China's tepid economic recovery. Consequently, this decision has resulted in a lowered shipment target for Pico's VR headsets.

Secondly, despite Pico's efforts to educate consumers on the enjoyable and entertaining experiences offered by VR headsets over the years, the absence of killer applications and a robust content ecosystem remains a significant challenge in China's VR industry, hindering user adoption and retention.

Additionally, during H1 2023, the absence of enticing new products in China dampened consumer demand. While the sales generated by new models such as Sony's PSVR 2 and the Pico 4 Pro showed promise, they were insufficient to counteract the noticeable decline in the overall market.

As a market leader, Pico holds a substantial market share of roughly 50%. However, even Pico experienced an over 50% YoY decline during H1 2023. Sony captured a 19% market share thanks to a significant sales surge following the release of PSVR 2. Nevertheless, it is expected that the momentum of the PSVR 2 will wane during H2 2023. DPVR ranked third with a 19% market share and continues to lead in China's enterprise segment due to its competitive pricing, according to Counterpoint.