It’s certainly an underlying current in the commentary surrounding recent news in the augmented, virtual, and mixed reality spaces, otherwise known collectively as extended reality (XR). Apple is reportedly scaling back Vision Pro production after weak sales, not long after launching the headset to much fanfare. It’s not just hardware, either; Microsoft-owned Mojang is ending all VR support for Minecraft by March 2025, and Ubisoft has no current plans to invest more in the space following disappointing sales of Assasin’s Creed Nexus VR.

Opportunity, not threat

People might use this news as a sign that the XR sector is struggling. Two of the biggest names in hardware and software apparently can’t make it work. What hopes does anyone else have?

That is one way of looking at it. Another way is that it is actually a huge positive for the wider industry for two reasons: it opens up the field for more nimble operators and increases the likelihood of unlocking the innovation XR needs to become fully mainstream, particularly around the software and gaming side.

Apple’s problems stem from the Vision Pro’s huge price tag. If that had somehow become the norm, then XR would have been restricted only to those users that could afford it: specialist businesses and wealthy individuals. It would have remained highly niche.

Stepping back is a tacit acknowledgment that for XR to go mainstream, powered by innovative software and games, the device needs to be affordable. Meta has already seen how the right price can drive sales: when it discounted the Quest 2, it reportedly sold some 20 million headsets. With the Quest 3S costing about the same as a Nintendo Switch or digital edition of a PS5, Meta has firmly set its stall out as the mass market headset.

Mojang’s decision to focus on safer bets, such as its new PS5 version, could have a similar effect. Minecraft would be an ideal fit for XR – when in first-person mode, the slightly disembodied hands are reminiscent of many VR games. However, Mojang is also a huge company with significant liabilities and commitments. Even delivering something like Minecraft will cost a huge amount, which it needs to be sure it can recoup (and profit from). A relatively new gaming platform possibly isn’t the right environment for AAA developers who need guaranteed wins.

The perfect moment for XR startups

That’s good news for smaller businesses with a deep understanding of XR. These sorts of companies are usually more agile, have a greater appetite for risk and are more willing to try things that might not work. While there is certainly an expectation that they will create profitable products in the long run, they do have breathing room to develop user experiences that connect with a wider variety of audiences.

It is exactly the process that mobile gaming went through. The companies that did well were innovative startups that focused on perfecting the game mechanisms using the hardware available. They were not major players relying on scale to dominate markets; instead, their deep knowledge of the space led them to become industry giants. Companies like King, Rovio, Playdemic, and Glu Mobile were agile operators that grew into unicorns.

The timing couldn't be better for XR startups. As tech giants pull back, smaller teams can move in and shape its future. The next breakthrough XR experiences won't come from corporate boardrooms – they'll come from passionate teams that are free to take real risks and push boundaries.

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