Today, during an online presentation, Sony unveiled a prototype VR headset with a 4K OLED micro display. The prototype appears to be a completely different project than the upcoming PSVR 2, however the company says the display itself will be "used in the entertainment sphere" that will include other VR headsets.
The 4K OLED micro display not only has a significantly higher resolution than the original PSVR headset (roughly 1MP vs. 16MP per eye), but also looks a lot more compact. Exact specifications were not given, but experts have suggested that its size is about 1 inch². The original PSVR used a single large display covering both eyes. The display shown in the prototype of the new headset is almost square, which makes it better for VR headsets since only one display can be used for each eye.
The new display is more compact, but it feels so small that zooming and focusing for an immersive field of view will require more advanced optics than most consumer VR headsets use today. This can result in a compact headset, although the presentation doesn't give a clear idea of the headset's main dimensions or what kind of optics are used.
The headset prototype appears to be a completely different project than the one the Sony PlayStation team has been working on, however there is a possibility PSVR 2 could use the same displays.
Though Sony is in the display business, the original PSVR actually used an OLED display made by Samsung. While many first-generation VR headsets similarly used OLED displays, second-generation headsets have largely switched to LCDs due to the advantageous cost, resolution, and brightness from the rich colors that OLEDs are known for.
Sony did not release its second-generation headset, and it's unclear at this moment if it will continue opting for OLED in the next PSVR headset, or if it will move to LCD like most of its peers. Rumor has it that it will again be OLED, but possibly made by Samsung.
Sony expects its 4K OLED micro display will be used both in "industrial applications" and "entertainment". This suggests that if PSVR 2 does not use this display, then we can see it in other virtual reality headsets other than Sony. The size of the display suggests it would be best suited for compact VR headsets like the Vive Flow.