The Past, Present, and Future of Developing VR and MR with Meta

We've got a ton planned for the developer community at this year’s GDC, and today I gave a talk there. The talk is intended to build on Samantha Ryan’s latest update to how our ecosystem has changed in the last year and where we see it growing in the future. This blog post summarizes that talk.

Before I get into how the ecosystem is evolving, let’s take a quick look at recent trends. Over $2 billion has been spent on Meta Quest titles to date, and total payments were up about 12% in 2024. Engagement was up at the end of 2024—customers spent 30% more monthly time in VR in 2024 than the previous year.

We launched some awesome games, including Metro Awakening, Skydance’s BEHEMOTH, Just Dance VR – Welcome to Dancity, our own critically acclaimed Batman: Arkham Shadow, and my personal favorite, Trombone Champ: Unflattened! With the launch of Quest 3S last year starting at just $299 USD, the number of people who own and are actively using an MR device is larger than it has ever been. That growth has translated into significant revenue for some developers, like Animal Company, The Thrill of the Fight 2, Ghosts of Tabor, and FitXR.

We also made changes last year to the Meta Horizon Store, opening it to everyone. That’s led to some surprise hits that we previously wouldn’t have anticipated. Titles like Yeeps: Hide and Seek, and VRFS - Football (Soccer) Simulator are growing quickly and generating a lot of money. And Gorilla Tag—an early mover in the free-to-play MR space—continues to dominate as one of the most profitable and successful MR titles of all time.

But not all developers are experiencing the same success. In fact, we’ve gotten a lot of questions from developers about revenue declines and concerns about reach. Even though overall revenue is up, we have seen a shift in the mix of what our customers are playing and what they’re buying—a lot more social multiplayer meme games, a lot less big-budget single-player games, for example.

So we asked ourselves: What’s happening? Are these shifts the result of changes we’ve made to our platform?

Of course, it would be remiss of me to ignore the greater trends happening in the game industry. Overall, the industry has slowed significantly in the last three years. Spending is flat, investment has dried up, the only games that seem to be doing very well are big live service titles and indie darlings. It’s pretty tough to be a big-budget single-player game on any platform these days. And that climate impacts games in virtual and mixed reality, too.

But I want to focus on the changes that we can measure on our platform that are specific to Quest and the Meta Horizon Store.

Developers have theories about what’s going on. Here are a few of the theories I’ve heard:

Everybody has a theory! But it’s hard to tell if they’re accurate or not because we’re operating on the bleeding edge. Nobody has built an MR headset at this scale before. The business dynamics of making a fully immersive VR game are not the same as mobile or console games, and we can’t always apply precedent from other platforms to predict the future. The cost of going hard on innovation is having to test every assumption along the way.

The good news is that we’ve done a ton of data analysis on this topic. And what we found surprised us. But before I get to the actual impact of all the changes we made last year, I need to explain how customer behavior on our devices has shifted over time.

The audience for VR and MR is in transition. We’re moving from a single audience to several independent audiences, and that shift has actually been happening little by little for years.

To explain what I mean, it’s worth taking a look back at the last decade of our history. Much of our focus for the last decade has been tech innovation. To make VR and MR as a product work, we’ve had to innovate significantly at every step of the way: from head and controller tracking to packing high-end VR into standalone form factors to pancake optics and mixed reality tech. But innovation is also about product pathfinding: figuring out not just how to make virtual and mixed reality work, but how to turn it into a product that appeals to a very large audience. You can look at our product history not just through the lens of technology, but as an exploration of new ways to make our products relevant to larger and larger groups of people.

Our goal has fundamentally been to grow VR and MR to appeal to as many people as possible, and with every product launch we’ve tried to expand the market by broadening the audience for our devices.

Over a decade ago, right about the time I joined the company, we launched the Oculus Development Kit 2 (DK2) to a group of core VR enthusiasts. The DK2 was our first real six-degrees-of-freedom VR device. It was early, it was janky, but it was also magical. The audience for this device was people very excited about the possibilities of VR technology. Most of our content was experimental hacks, weird apps, and people trying to figure out the basic grammar of VR interaction. We didn’t know how to comfortably move forward in virtual space yet!

Our first real product, Oculus Rift, launched in March 2016 to great hype. It was high-fidelity and targeted people with high-end graphics cards in their home gaming PCs, which is to say the hardest of the hardcore gamers. The DK2 audience came along for the ride, but the Rift audience was less interested in the technology of VR. They wanted games with production value, not tech demos.

One of our first attempts to grow the audience to a larger, more mainstream group was Oculus Go, a three-degrees-of-freedom device that launched in 2018. It was designed to be a low-cost casual device. It sold well, but 3DOF is not enough, and our content catalog wasn’t good enough to sustain an audience. We had great internal debates about the relative merits of a high-fidelity device like Rift vs. a highly accessible device like Go at the time, and I gave a talk about this at GDC in 2022 if you’re interested.

Then we released Quest, Quest 2, and Quest 3. With each iteration, we’ve attempted to broaden the audience. Quest initially landed well with a core games audience who didn’t have a gaming rig and didn’t want wires, and Quest 2 expanded to a mid-core crowd. These folks wanted not just games, but also sports and fitness applications (which, by the way, opened Quest up to a lot of people, including many women, who may not have otherwise considered VR). Launching at the height of the COVID lockdown, Quest 2 grew and diversified our audience significantly. This was also when we started to see teenagers adopt the device.

The Quest series represented a significant audience shift away from the core Rift audience. Many on the Rift side were concerned about the decline of PCVR. But there were many, many more people who wanted a standalone headset. We also tried to further expand our audience with the launch of Quest Pro, an expensive high-end device with a lot of futuristic features, but it didn’t sell, primarily because of its price point and its audience target, which was professional adults. Quest 3, on the other hand, has continued to sell to a broader demographic of folks who like playing games, working out, and watching movies.

From the original Quest to Quest 3, our audience shifted from core gamers and early adopters to a more general crowd of people who love VR and use it for games, fitness, social, and movies. These are primarily tech savvy adults, and we call them the “VR Elite.” We’ve also seen teens, particularly in social competitive titles like Gorilla Tag, grow in number with every device.

Last year we shipped Quest 3S, a low-cost device designed to expand our audience beyond the VR Elite folks and into new audiences, primarily by making it affordable. As with every device, our goal has been to expand the audience of MR.

But the launch of Quest 3S signaled a larger audience shift than we expected.

Quest 3S has sold well, but from the beginning it’s bucked the patterns we usually see with hardware launches.

The pattern of device sales and activation, from pre-order through the winter holidays, has been pretty consistent for our previous devices. Typically when we announce a new headset we get a bunch of pre-orders. We see a spike in sales at launch, followed by another spike around Black Friday. And then we see a huge uptick in usage on December 25 as holiday gifts are activated. That’s been the case for nearly every one of our Quest headsets.

But Quest 3S didn’t follow that pattern.

Launch went very well, even though we didn’t get as many pre-orders compared to previous launches. There was a Black Friday sales spike. During the two full weeks of Black Friday and Cyber Monday, Quest 3S sold over 7X our pre-order totals. But many of these devices weren’t immediately activated, and we anticipated that they were wrapped up and waiting to be opened as holiday gifts. At $299, Quest 3S is an incredibly giftable device. We worked hard to make it a great gift! And sure enough, during the week of Christmas, Quest 3S activations exceeded 6X what we saw on Black Friday and Cyber Monday.

Not only did Quest 3S sell differently than our previous devices, the Holiday cohort of customers also behave differently than previous customers. In particular:

We were surprised by this behavior and did quite a bit of research. And what we’ve found is that a growing proportion of these folks are teenagers and young adults. They don’t have a lot of disposable income on their own, they received a Quest for Christmas, and they want to play the same sorts of games they’re playing elsewhere. On non-MR platforms teens play things like Lethal Company, Roblox, and Fortnite. There’s a whole range of titles like Raft, Content Warning, and Melatonin that are popular these days. (PSA: Play R.E.P.O. if you get the chance.) When they put on a headset, they look for similar things.

The teen audience isn’t new—they’ve been growing in number with every device we release—but with Quest 3S, they’re now the most active segment on the platform. That’s a massive shift in customer base and purchase preferences.

According to our research, the changes to the Horizon mobile app, the deprecation of App Lab, and the opening of the Horizon Store were not significant contributors to the overall decline in revenue that some devs have experienced.

We’ve found that new customers spend less than the older ones did. Actually, the older ones are spending less, too, and their behavior has been trending this way for a while—long before our store changes rolled out. My guess is that we’re not the only games platform experiencing this pattern.

But perhaps more importantly, the mix of our incoming new users is changing. With Quest 3S, more teens and young adults (13-24) are coming to the platform. And they’re the most active users on the platform compared to other age groups.

Now I’m sure that, for some developers who experienced revenue declines in 2024, this research is difficult to reconcile with the business results they directly observed. We’ve heard from a few devs, particularly those targeting VR Elites, that the impact of those changes was large, even though the platform overall is up. It’s worth taking a moment to go through the research we performed to arrive at this conclusion.

Every change we make to the platform is exploratory. We run large data analysis all the time on the impact our changes have had. Meta lives and dies on its ability to validate ideas with real users, and if a test doesn’t work out, we try something else.

In the case of Horizon Store changes, for example, we used a method called a “holdout group” to test the changes. That means there are a group of users who don’t see any of the modifications we’ve made to the store. For them, everything operates as it did at the beginning of 2024. Comparing their behavior to the group that does see the changes allows us to do apples-to-apples comparisons and isolate the impact of changes like opening the store, or using our mobile app to surface Horizon Worlds. As a result we have an idea what the actual impact of all these changes was to our platform.

We looked at both the switch to an open store and the promotion of Horizon Worlds content in our mobile app. As an aside, it’s important to note that these systems aren’t static—we’re constantly tuning them and changing them, and we’ve made quite a few changes since our open store announcement last year.

As we shifted to an open store, we exposed different consumer cohorts to the “old view” and the “new view” of the store to see if there were any differences. We tracked this for months. We saw an impact of <1% to total payment volume due to the opening of the store. This <1% was made up of other things. We were also able to show that increased Horizon Worlds content in the Horizon app decreased total payment volume by at most 3%. We came out at a net growth of 12% for the year.

Perhaps this is not so surprising. Also according to our research, we think a lot of customers who buy paid apps (particularly the VR Elite crowd) come to our platform already knowing what they want to purchase. During their first month they tend to spend a lot and explore, but after that many come back to purchase with a particular title already in mind, something they’ve discovered through their communities, friends, and social networks, not by browsing our store.

I think some developers predicted that IAP revenue would spike with our store changes, but we did not observe that. While revenue from in-app purchases (IAP) has been growing year-over-year as a percentage of total store revenue, paid apps remain the largest source of revenue.

The bottom line is that the changes to our ecosystem that developers have experienced are not primarily attributable to the changes to our store and app. We were not sure about this until we dug into the data, but overall the impact has been very small. Far more massive was changing trends in purchasing behavior from newer users and the rise of teenagers as an audience.

Now, before you all run out and shift your investments to meme games for 14-year-olds, our research also identified something else.

First, the VR Elites remain exceptionally interested in VR software, but they’re growing much more slowly than other audiences, and some need specific outreach to reactivate. It’s also likely that they’re spending less for the same reasons folks spend less on all games these days.

Second, and more importantly, teens are not the only new audience in VR.

We also see a rising group of mainstream adults who use their headset for media and entertainment growing on the platform. These folks are distinct from our previous VR Elite cohort in that they’re not necessarily VR true believers, they don’t self-identify as core gamers, and they see their headset as an extension of their TV—a device primarily for media consumption.

These are largely 30-something men who enjoy spending money on high-fidelity ways to watch their favorite movies and shows. They like sports, action movies, concerts—all kinds of stuff. They also play games on their phones or consoles, but it’s a secondary pastime.

These people see Quest as a high-end way to watch TV and movies, and they’re growing quickly. By the beginning of 2027, we predict that they’ll be a major player in the ecosystem. And my suspicion is that their content preferences aren’t going to be meme games.

We know our audiences are changing. What are we doing about it?

We aren’t satisfied with success for a single audience. We need people from all walks of life to enjoy using an MR headset. Our constant push for the last 10 years, starting with Rift, has been audience expansion. That means we need a platform where core gamers, teens, and people who just want a private theater with a massive screen can all engage, spend money, and participate in the ecosystem. It means we need a platform where paid games can co-exist with free-to-play, without a race to the bottom or bankruptcy of single-player experiences.

Here are some of the changes we’ve made so far and a few more that are in the works:

We also launched a new monthly series for developers called “Growth Insights” to share data and best practices about the business on our platform.

As always, these changes are experimental. We’ll continue to test, learn, and iterate to improve the ecosystem for everyone.

We realize that 2024 had a lot of change all at once. We spent a long time unpacking and untangling the impact of these changes because it’s easy to conflate correlation with causation. The research isn’t done yet—we’re still learning and fine-tuning. For example, our store ranking algorithm has changed significantly several times over the last 12 months. It’s an ongoing project, and we don’t always get it right. Luckily, the data tells us pretty clearly when we’ve made mistakes so we can course correct.

I want to take a moment to touch on the progress we’ve made with Horizon Worlds. UGC is a crucial part of any growing platform, and we’re very excited about the worlds that Horizon Worlds creators have been building lately. As we’ve continued to improve the quality of our core engine, we’ve attracted a new group of skilled creators to it. This new class of creators has helped Horizon Worlds grow a ton in the last year, with their inventiveness and willingness to try new things and embrace a new platform.

But our ambition for Horizon Worlds is to be much, much larger. To expand the Horizon Worlds audience we’re investing heavily to bring our UGC-based social game engine to mobile. While you can play Horizon Worlds games today via the Meta Horizon app, what’s available now is really an early test. Most mobile players today already own a headset, but we think that, in the future, most players on mobile won’t necessarily be MR owners. We hope to grow the Horizon Worlds audience significantly via mobile, and to drive adoption of MR headsets with this audience with mobile games.

That’s part of the reason why we recently announced a new $50 million Creator Fund to help incentivize creators and devs to try their hand at Horizon Worlds, with a focus on social games for mobile. In particular, we’re interested in finding mobile game devs who know how to make a sticky phone game. Ultimately, we’re investing in both mobile Horizon Worlds and MR based worlds because both are important to our long-term success.

Speaking of investment, last year we announced the Oculus Publishing Ignition program, which was designed to help bootstrap young startups formed after the game industry suffered from massive layoffs. The program was a huge success, and we received hundreds of applications. In the end, we settled on 21 companies to receive funding.

And Oculus Publishing continues to grow. In 2024, we shipped over 100 titles funded, supported, and managed by the Publishing group, and we have over 200 more in active production. Our focus for 2025 is largely on that rising tide of mainstream adults that we expect to flood the ecosystem in the next few years.

Our commitment to continuing to grow the ecosystem is unwavering, but we’re learning in real time. We rely heavily on developer feedback to guide us as we write our roadmaps. Please continue to tell us more about your company, your goals, and the expectations you have for revenue.

We can build great hardware, but it’s your content that gets people to show up. Whatever the future holds, none of it would be possible without you.