US commands 40% of the VR headset market

VR gaming stores and booths have cropped up all around China over the last year, showing the country has a strong appetite for the technology. Still, demand for VR headsets wasn't strong enough to best Japan. China fell from the second to third largest VR market based on shipments in the first quarter as shipments in Japan rose to 81,000 units. The US remained the largest VR market at 40 percent of the global market, according to Canalys.

Much of the demand in VR right now is for PC-connected VR headsets. These are known to provide the best experience, and Sony has been a big benefactor with its PlayStation VR. The PlayStation VR headset continues to dominate the market in the US and Japan. In the latter market, it has 90 percent market share. It helps that Sony's PlayStation 4 is one of the most popular gaming consoles on the market and many people don't have to spend extra money on an expensive computer that meets the headsets requirements, which was a barrier for devices like the Oculus Rift and HTC Vive.

The Vive is still doing well, however. It has the largest market share in China, where it shipped 15,000 units. Though China itself has many manufacturers working on their own VR hardware, they have not yet been able to compete with the top brands like Sony, HTC and Oculus.

There is still a lot of demand for VR in China, though. It could become the first country with a wide penetration of VR in public and private schools, according to Canalys. HTC has been pushing hard to get into China's VR market and has been building relationships with local and government establishments.