Sony Corp has suspended production of its PS VR2 headset until it clears a backlog of unsold units, according to people familiar with the matter, adding to doubts about the appeal of the virtual reality device.

Sales of the $550 PlayStation 5 wearable accessory have gradually slowed since its launch and inventories of the device are building, said the people, who asked not to be identified because the information is private. People familiar with the matter said that Sony has produced more than 2 million units of this product launched in February last year.

PS VR2 shipments have declined every quarter since launch, according to IDC, which tracks deliveries to retailers rather than consumers. The remaining assembly equipment is spread throughout Sony’s supply chain, people familiar with the matter said. Still, IDC’s Francisco Jeronimo believes the product category will recover in the next few years, helped by Apple’s entry. “We forecast the VR market to grow at an average annual rate of 31.5% between 2023 and 2028,” he said.

Like Meta Platforms, Sony has been one of the leading providers of virtual reality gear, but both companies have struggled to attract enough content and entertainment creators to make their platforms compelling. Similar issues plagued Apple’s much more expensive Vision Pro headphones, which debuted without custom apps from major entertainment platforms Netflix and Alphabet’s YouTube.

Sony did not respond to a request for comment.

Tokyo-based Sony announced last month that it would close its PlayStation London unit, which focuses on making virtual reality games. The move is part of wider layoffs that also affect in-house studios such as Guerrilla Games, which had been working on a PS VR2-exclusive game in its popular Horizons series Call of the Mountain.

Macquarie analyst Yijia Zhai said: “The high price of VR hardware is the main obstacle to its expansion.” “There are currently limited games that support VR devices, which will also lead to players lacking motivation to buy VR hardware. There is also a reason for the limited content. ——The development cost of VR games is much higher than that of ordinary games.”

Sony is still working to expand the range of material available on the headset, and in February said it was testing the ability for PS VR2 players to access PC games.

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