Metaverse And VR Funding Slides Further As Even Apple Can’t Make A Hit

Joanna Glasner jglasner

Apple is known for launching generationally iconic consumer devices. But not every gadget goes on to be a hit.

Take the Vision Pro, Apple’s $3,500 mixed-reality headset that launched to great fanfare early this year. Now, the company reportedly may be on the cusp of ending production, following months of slow sales.

If this does come to pass, it won’t be a surprising development. Early on, Apple failed to sustain enthusiasm for the device it introduced as a “spatial computing” breakthrough in areas from immersive video to workplace collaboration to content creation.

A common theme in online discussion and reviews of the Vision Pro was that, although people liked it, they weren’t finding many ways to fit it into their work and recreation routines. Consequently, even those who could afford the device tended to consider it pricey for something seldom used.

AR/VR still not a hitmaker

Apple’s suboptimal foray into mixed reality computing follows a long line of startup flops in the augmented reality, virtual reality and metaverse space.

Investors have taken heed. So far this year, roughly $758 million has gone to rounds for startups tied to AR, VR and the metaverse, per Crunchbase data. That’s on pace to be the lowest annual total in years, as charted below.

Most of the startups that raised the biggest financings during the peak funding of 2021 have not closed new equity rounds since then. This includes headset maker Magic Leap and augmented reality game developer Niantic.

This year, while funding is down, we’re still seeing some good-sized rounds. The biggest AR-related investment went to Rokid, a maker of augmented reality glasses that raised $70 million back in January. Redwood City, California-based Rokid primarily markets its products for workplace and industrial use cases, but also has a consumer offering.

Another larger financing went to Beijing-based Xreal, a maker of mixed-reality glasses that raised $60 million in a January round at a value of $1 billion. The company pitches itself as a lower-cost competitor to Meta’s Quest and Apple’s Vision Pro.

Cheaper devices on the horizon?

Looking ahead, it’s likely mixed-reality device developers will be emphasizing lower cost options given that pricier ones haven’t been heavy sellers.

Apple, for instance, is reportedly working on smart glasses. The company is also said to be developing a cheaper headset as an alternative to the Vision Pro, which could be available in 2026.

Meanwhile, Meta has rolled out its own smart eyewear lineup in partnership with Ray-Ban, starting at around $300. While it’s promoting features like hands-free calling and picture-taking rather than a portal to a virtual world, such offerings could boost consumers’ comfort level with wearables.

Despite setbacks, it still may be too soon to give up on the vision of a widely popular, wearable headset or pair of glasses that also serves as a portal to a more immersive digital experience. Clearly, however, we’re not there yet.