A historic amount of new VR headsets were revealed, smart glasses emerged as a truly breakout segment, and prospects for XR continue to brighten.
By all indications, 2025 marked a significant year for XR. The acronym XR, which represents eXtended Reality, encompasses VR, AR, and all related technologies, forming one of the few consensus terms within the industry. The wearable face computer market expanded throughout 2025, all beginning with VR.
The past year was crucial for major VR launches, and while some of that momentum carried into 2025 with titles such as Deadpool VR, Alien: Rogue Incursion, Thief VR: Legacy of Shadows, and others, the true triumphs belonged to indie developers. This is largely because, for reasons unknown, Meta Quest players appear to favor smaller games that generate substantial buzz on social media.
A prime example is Animal Company, which attracted “over 1 billion views organically” on TikTok, as per a blog post from a Meta developer profile. This led it to secure the 5th-highest first-year revenue for a VR title, boasting over 1 million active monthly users and inspiring numerous clones. UG VR represents another success, following the same trend of free-to-play games with in-app DLC options.
This change has pleased smaller teams, yet it has also driven several businesses to shut down. Meta dismissed numerous employees across its first-party VR development studios, and we witnessed the closure of established studios like Toast Interactive and WIMO Games. The silver lining is that the Quest once again surpassed most major consoles in sales this Black Friday/Cyber Monday, according to publicly available data, a trend that has become a holiday staple over the years.
All of this culminated in early December when Meta chose to cut 30% of Reality Labs’ budget starting in January 2026, a decision that had been overdue as the department’s expenditures had spiraled out of control over the years, while other Meta divisions have faced 10% year-over-year cuts since 2022.
While that may sound negative at first, it is setting the stage for a more efficient Meta Quest. Two lead product and UI designers from Apple joined Meta in early December, and it is rumored that they will be involved in redesigning the Quest UI and crafting the Quest 4 into an ultra-light, sleek, gaming-centric headset.
This shift is also notable because Meta finally faces significant competition in the industry. Apple launched an upgraded Vision Pro with a new chipset and a more comfortable head strap in August. Additionally, Samsung has finally introduced the Galaxy XR headset alongside Android XR.
To enhance things further, we had the opportunity to test Android XR on Xreal’s Project Aura smart glasses, expected to launch in 2026. This represents a complete VR headset operating system within a pair of lightweight and comfortable smart glasses, poised to be a substantial game-changer next year.
Moreover, Valve announced a new VR headset named the Steam Frame. This headset operates on a new version of SteamOS that can run Windows VR games on a mobile chipset and also natively handle Android games. It is anticipated to create significant impact, as you might expect, in early 2026.
The year smart glasses triumphed
The VR sector has never seemed more active, but the smart glasses category has not experienced the level of success it achieved until 2025. Ray-Ban Meta Smart Glasses served as the turning point the industry required, and Meta intensified its commitment to dominate this segment for years ahead.
The company increased production of its glasses back in February, then launched a series of new glasses to raving reviews in the fall. Ray-Ban Gen 2, Oakley Meta HSTN, Oakley Meta Vanguard, and Meta Ray-Ban Display Glasses all caused significant impact, likely resulting in even more substantial sales, establishing Meta as the leading smart glasses provider after years of investing billions in research and development.
However, the standout was the Meta Ray-Ban Display Glasses. These are the first consumer-ready version of Meta’s smart glasses featuring a display, and while they come with a high price tag, they represent a crucial milestone in the smart glasses race.
This was also the year when Google began taking smart glasses seriously again. We experienced Google and Samsung’s prototype smart glasses back in May, and a subsequent Android XR event in December provided us with even deeper insights into the company’s ambitious plans for 2026.
This does not merely imply AI glasses to rival Ray-Ban and Oakley Meta smart glasses; it also indicates plans to leverage partnerships with existing smart glasses manufacturers. Magic Leap smart glasses powered by Android XR were showcased in October and will enter competition with Meta Ray-Ban Display Glasses, while Xreal Project Aura is going all-in with a complete VR UI in a stylish pair of smart glasses.
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