The highly-publicized partnership between LG Electronics and Meta for an extended reality device seems to have fallen through largely due to the lukewarm outlook for the XR market overall, according to industry sources on Monday.

“LG and Meta may continue collaborating in other areas such as artificial intelligence and metaverse. But for an XR device, they are pushing back their plans after seeing the sluggish sales of the earlier models, especially Apple’s Vision Pro,” an industry official said on the condition of anonymity.

The two tech giants started talks for their XR partnership in February when Meta CEO Mark Zuckerberg and LG Electronics CEO Cho Joo-wan met in Seoul for the first time. Over lunch, the two CEOs reportedly discussed the direction of next-generation XR device collaboration and the possible collaboration on AI.

Two months into their collaboration, the two companies found differences in the direction of the joint XR project, sources said.

“LG was the first to request to end the partnership,” the official said.

LG was expected to benefit from using Meta's various content sources and its know-how as one of the first tech giants to launch a virtual reality headset in 2016. Meta also has its XR operating system Horizon. Meta would have expanded its influence in the XR market taking advantage of LG's brand power and expansive sales network.

If their joint project were to go as planned, LG and Meta's smart headset was expected to launch in 2025, at a price of about $2,000. This is twice the price of the current Meta Quest Pro, and cheaper than Apple's Vision Pro which was launched early this year in the US at $3,500.

The global XR market has been forecast to grow in the coming years. According to market tracker Counterpoint Research, the shipment unit of XR headsets was expected to reach 3.9 million this year, manifesting a double-digit growth rate from last year.

But the prospect may be adjusted, with the disappointing score of Apple's Vision Pro. While Apple has not revealed the sales record, its mixed reality headset Vision Pro has not been selling as well as initially expected, and Apple has slowed down the production of the smart headset.

The slow pace of adoption appears to be leading the rivals to revisit their XR initiatives, including LG Electronics.

Meanwhile, the Korean company is reportedly looking for a new partner. Among the next potential candidates is Amazon. Amazon operates Amazon Prime, its over-the-top service, and has access to, and handles numerous media contents.

LG has been considering commercializing XR devices for several years, and the company launched a team dedicated to XR technology development under its TV business unit early this year.