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The Stinger Report #1243 - Defining XR Landscape
The VR and XR industry is undergoing a significant shift marked by widespread hardware and content abandonment, driven by escalating costs and shifting corporate strategies. Major players like Meta, Microsoft, and Magic Leap are retreating from consumer-focused VR, with support for key headsets and IPs withdrawn or scaled back. Meanwhile, enterprise hardware firms like Varjo are refocusing on B2B markets, and new AR-smart glasses from HTC and others signal a pivot toward augmented reality. Despite substantial losses—particularly Meta's $4.5 billion quarterly deficit—the industry is evolving, with upcoming events like Meta’s CONNECT 2025 poised to determine whether VR remains a viable consumer platform or transitions into a niche segment within the broader immersive ecosystem.
This is the Stinger Report, issue number 1243, defining XR Landscape by Kevin Williams. The video game industry has been accelerating in relevance in the international conscience. This was seen with the holding of National Video Game Day on the 8th of July, which seemed a good time to hold. Develop Brighton 2025, the UK Video Game Developers Conference and Expo Organizers. Tandem events organizing the gathering for the videoers Conference and Expo Organizers. Tandem events organizing the gathering for the video game development and publishing community. Seeing continued the reverberations we charted from the Game Developers Conference earlier in the year, the impact of massive layoffs across game development houses, as well as the impact of a changing landscape. The transition of the ninth generation of the video game console wars also marked a transition of the immersive entertainment landscape into the next phase, defined best by the transitional situation impacting the XR landscape.
Speaker 1:Removals and Abandonments in XR. Removal of VR game content from usage has become a growing concern for the turbulent VR arcade landscape. We have witnessed developer Beat Games ordered by their parent to remove the leading VR Beat Saber from commercial usage, which was followed by other successful titles such as Job Simulator. The impact on taking the most profitable and recognized IP from the usage of venues seems to be caused by a mixture of business policy changes internally at key studios, pressure to focus remaining resources wholly on consumer and the inability to pay for resources to maintain and license properties. Most recently, we saw the removal from both consumer and commercial usage of the popular John Wick VR game, an IP owned by Lionsgate Studios. The commercial VR game, called John Wick Chronicles, had been one of the first popular movie IP-based commercial VR titles Developed and released by Starbreeze Studios in 2017,. The game had been deployed in several early VR LBE sites, most notably at the Sega VR Arena. Star VR in Tokyo. The IMAX VR Experience Center chain also partnered with AMC and the original Dubai Mall VR Park venue before the refit. These 2017-18 projects would then devolve into the game content being made available as a distributed title for VR arcades. The LBE version of the IP was used as leverage, along with other games, to establish the failed StarVR headset project. Starbreeze would be embroiled in management difficulties that would see the assets of the company restructured, along with the C-Suite executive team. The new management's decision to totally expunge the John Wick VR property from usage is rumored to be linked to termination of the usage of the IP by the current owners pivoting away from supporting their failed VR business plan. Further details to be shared in coming weeks regarding this and other issues that will impact the VR arcade landscape.
Speaker 1:The clearing of the decks and the expunging of the previous generation of XR hardware accelerated with the news of the latest abandonment. The need for constant software updates to allow VR and MR headsets to comply with software revisions is essential to their ability to stay operational. The removal of general software support is, in effect, a death sentence for these systems. This software support is expensive and continues investment by corporations in lines that they may feel have failed to meet achievements or promised sales goals, so it is easier to abandon and move on to more hoped, profitable lines of business. The abandonment of VR and MR business has been reported by operations such as HP that, in 2023, pulled support of their G2 VR headset range. Likewise, microsoft announced the ceasing of support and development first of their HoloLens headset line and then of their Windows XR platform. That abandoned numerous third-party headsets. Magic Leap announced that they had ended supporting their range of AR headsets and, only a matter of months ago, metareality Labs' operation confirmed they would be not developing a MetaQuest replacement in the near term. These announcements are vague enough to avoid admittance of total abandonment, but reflect that those that have invested in these platforms for consumer utilization are living on borrowed time. With these developments, the latest shoe dropped regarding the epitaph of the previous generation of VR technology Commercial PC VR slash MR hardware developer Varjo announced that they would be ending general support of their third-generation headsets, including the Varjo XR3, varjo VR3, and Varjo Aero lines. The suspension will commence from the beginning of 2026, with the reason given for the abandonment being to allow Varjo to focus on future hardware plans. Varjo had flirted with releasing their high-end XR technology for a waiting list of consumer users, but seem to have cooled on this idea, reversing this plan after failing to achieve expectations, returning to a wholly enterprise hardware focus following the launch of their fourth-generation hardware, such as their Vario XR4 Focal Edition, launched in 2023.
Speaker 1:While some developers have abandoned current consumer VR investment, there is still some that hope to achieve the hype in PC VR hardware once promised. The remaining VR community hold up the popularity of headsets from the likes of Big Screen Beyond VR and their high-performance PC VR headsets, most notably employed to consume media rather than traverse virtual environments a factor seen with the Apple Vision Pro While at the same time moving away from the tethered PC VR landscape. Valve, who established success with their PC VR Index VR platform, are linked to leaks of their intended launch of their Valve Deckard headset, a successor to the Index that will be standalone, using unique VR streaming technology, offering a proposed higher performance than current smartphone processor powered standalone systems. The market awaits to see if this platform could turn the tide, continuing the turbulent path for the current phase of VR, and it was revealed during their second quarter earnings report that Meta Reality Labs had an operating loss of $4.53 billion, this on sales during the quarter of $370 million, underlining the continued hemorrhaging from their Metaverse investment, this marking an increase in the loss compared to last year's $4.49 billion, marking a total loss of some $70 billion since the operation was formed into its own segment in 2020. Attempting to find a positive amongst this amazing loss, spokesperson pointed to Meta's smart glasses, developed with Essilor Luxottica, had seen sales triple year over year. This came at the cost of the core Meta VR hardware sales that again saw a fall. No matter the attempt at a positive spin, it is expected in September Meta will confirm major developments surrounding their Reality Labs operation and future hardware roadmap.
Speaker 1:The erosion of VR hardware sales. The Meta Quest 3 and Quest 3S line reflects the imploding consumer VR market. 3 and Quest 3S line reflects the imploding consumer VR market, even the heavily subsidized Quest 3S finding it difficult to achieve sales goals. This in the face of no real competition in this product category, some sources suggesting that the Quest 3S had seen positive Christmas sales but this had not carried forward, forcing a complete rethink on future investment in headset hardware, with a planned Quest 4 shelved for a new MR product line and focus on their Horizon OS, third-party usage of the OS hoping to lessen the need for Meta to continue developing their own hardware. Sources adamant that Meta will not reverse their long-term investment in the Metaverse, it cannot be ignored that restructuring not only of the roadmap but the business structure going forwards has been decided.
Speaker 1:A need to induce a positive spin in the meta-phenomenal investment into the metaverse business plan was evident in the reporting, as well as attempts to promote R&D development. The company exhibited at SIGGRAPH, the Computer Graphics Conference and Exhibition, with a concept for a wide field of view FOV headset codenamed BOBA3. Along with other prototype concepts, the company hoped to quell investor concern in their development roadmap, though some observers said these prototypes have little chance of ever being applied as actual products in the short term and did little to promote Meta's vast VR expenditure, but only raise more questions. This report going to the wire before Meta holds their Connect 2025 event. The reality of the situation facing the anointed leader of the consumer VR revolution is hard away from the vast losses that their Reality Labs operation is experiencing and the abandonment of the focus on VR to AR and AI, the Connect event will mark a line in the sand where VR will either continue to flourish as a free-to-play platform for children, players hooked on Guerrilla Tag or will find a new direction.
Speaker 1:Meta-promoting aspirational prototypes aside, they also look to try and define the usage cases for the medium, recently promoting a Goldilocks zone for usage of the VR hardware. Looking at 20-40 minute optimal duration. While Meta may feel they can dictate best practice, those outside of consumer VR feel they have a better perspective on the optimal usage experience, focusing on the actual user enjoyment. The pivot to an AR future away from previous VR investment can be seen across the XR landscape Operations that had doubled down on VR headsets now migrating to an AR smart glasses offering. This was seen from HTC revealing their attempt to compete in this sphere, with the new Vive Eagle, media capture and AI assistant AR light glasses joining the crowded waters. All this while the MR sector still awaits Samsung's slash Google's entry into the space, planned for the end of the year. We await to see if Kinect will address Meta's consumer VR aspirations beyond being a niche.
