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Facebook’s Oculus Leading as VR Market Rebounds

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Dec. 12 2018, Updated 7:31 a.m. ET

The Global VR market expanded 8.2%

According to IDC, Facebook’s (FB) Oculus subsidiary finished at the top of its industry in terms of product units sold in the third quarter. Oculus, Facebook’s virtual reality product arm, shipped 491,000 VR headsets in the third quarter, capturing 25.9% of the VR market.

Approximately 1.9 million VR headsets were shipped globally in the third quarter, with the global VR market expanding 8.2% YoY (year-over-year). The VR market returned to growth in the third quarter after four quarters of decline. New products, lower prices, and an increase in VR content supported the rebound.

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A $27 billion commercial opportunity

Facebook’s Oculus has launched Oculus Rift and Oculus Go VR headsets. A new headset, Oculus Quest, is in the works and scheduled to arrive early next year.

According to Zion Market Research, the VR market’s annual revenue was $2.0 billion in 2016, and it is expected to grow to $27 billion by 2022. Other companies chasing this commercial opportunity include Samsung (SSNLF), Sony (SNE), and Google (GOOGL). Sony’s PlayStation VR was the best-selling VR headset in the third quarter, according to IDC. Samsung and Google sell screenless VR viewers, for which revenue fell 58.6% YoY in the third quarter.

Diversifying outside the advertising industry

Through businesses such as Oculus, Facebook is working to diversify outside the advertising industry, where Amazon (AMZN) has emerged as a disruptive force. According to eMarketer, Facebook and Google combined controlled 58.7% of US digital ad market in 2017, but that share is expected to drop to 57.7% this year and to 55.9% by 2020.

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