Sony Halts PSVR2 Production Amid Slow Sales and Unsold Inventory

In a surprising turn of events, Sony Group Corp. has decided to temporarily cease production of its PlayStation VR2 (PSVR2) headset, a move that highlights the challenges the virtual reality (VR) industry is facing. With a stockpile of unsold units, stemming from diminishing sales, Sony has chosen to focus on selling its existing inventory before continuing the manufacturing of its $550 VR accessory designed for the PlayStation 5.

When Sony launched PSVR2 in February of the previous year, expectations were high, but interest appears to have waned more quickly than anticipated. The International Data Corporation (IDC), which monitors shipments to retailers, has reported that deliveries have fallen each quarter since the device's debut. Sony has produced over 2 million units of the PSVR2, but the accumulation of stock suggests that sales are not meeting forecasts.

The VR market has been in the spotlight, with large tech companies like Meta Platforms Inc. and Apple Inc. vying to carve out their space. However, both Sony and Meta have encountered difficulties in securing a consistent stream of content and entertainment to make their platforms stand out. Apple's Vision Pro headset, despite its higher price tag, has encountered similar issues, launching without support from major players like Netflix and YouTube.

Amid restructuring and layoffs, Sony also announced the closure of its PlayStation London studio dedicated to VR game development, raising questions about its commitment to VR content creation. The cost of developing VR titles, significantly higher than traditional games, poses a substantial barrier to the expansion of hardware like PSVR2, according to Macquarie analyst Yijia Zhai. Limited game support translates to a decreased incentive for consumers to invest in VR.

Despite the production halt, Sony is not abandoning its VR initiatives. The company emphasized in recent statements its intention to expand the PSVR2's content library and is currently exploring how PSVR2 players might gain access to PC titles.

As VR technology advances and platforms expand, IDC's Francisco Jeronimo projects a rebound in the VR industry, forecasting an average growth rate of 31.5% annually from 2023 to 2028. For Sony and its VR technology, the future holds opportunities, but only if it can navigate the complex content ecosystem that drives consumer demand in gaming.