Oculus Rift’s pricing and the future of VR

After a lengthy period of development (for lengthy read glacial), the first major milestone on the road to widespread, high quality VR was reached today with the launch of Oculus Rift pre-orders.
A growing community of developers and enthusiasts have been waiting and learning; hoping to shape an exciting future for this new medium (I’d proudly count myself among them).
I’ll admit that today’s announcement of the price-point – $599 (USD), £499 (GBP) did cause my heart to drop, as it did for many others. The cost is rather higher than was expected, and the reaction on-line was almost solely focused on this. What effect will this pricing have on the adoption of VR in 2016, the fortunes of Oculus’ competitors – and those of developers? Here are my thoughts.

PRICING AND THE LONG GAME

The first consumer version of the Oculus Rift will cost $599 (USD), £499 (GBP). Despite being a price point lower than could have been dreamt of just five years ago for such impressive technology, buying a headset will undoubtedly constitute a big investment for many, and a near-impossible sell for those who haven’t experienced the DK1, DK2, Vive or GearVR already.

It’s probably fair to predict that the Oculus Rift isn’t going to see widespread adoption in the market at large this year, with the perceived barrier to entry being so high. Mark Zuckerberg’s prediction that the Rift’s sales would be in the hundreds of thousands in the early years seem to be well informed.

“We’ve said that virtual reality and augmented reality could be the next big computing platform, but to put that in perspective, the first smartphones came out in 2003. In that first year, Blackberry and Palm Treo both sold around only a few hundreds of thousands of units.”

Mark Zuckerberg

I don’t doubt that the hardware is being sold at as low a price point as possible – Oculus has stated its aims to get headsets onto as many people’s heads as possible – profits be damned, however the net effect is that VR could remain the domain of enthusiasts and the well-off for some time to come. That’s a prospect which I find troubling, but which has been recognised by Palmer Luckey himself:

A product which has spent so much time in development – and with such specialised components, is realistically going to come at a premium. At some point over the past few years, Oculus decided to shift their focus from affordability (seen in the rough and ready DK1 and DK2) to the level of quality seen in the new release – which appears extremely high. Much has been said about Oculus’ desire to avoid “poisoning the well” of VR  with inferior technology; however the premium cost of the hardware inevitably limits the number of users who are prepared to pay for it.

My concern is that a smaller pool of customers creates a less attractive environment for game development companies to enter. Enormous companies such as Facebook and Oculus can afford to play the long game – absorbing the cost of a slow pick-up of adoption, while smaller companies and developers attempting to create quality content for the Rift from day one (and in some cases from years before) may be left with limited opportunity to make returns on their investment.

Whatever the case, many of those who make up the VR community are extremely passionate about this new frontier (for the record I dislike the reckless abandon with which the word ‘passion’ is bandied around – so I choose my words carefully), and are eager to see the day in which its potential is realised in society. It feels perhaps as though that day receded over the horizon and just out of sight again.

But enough of that! It’s…

Not all doom and gloom

Many will not be able to see the pricing announcement as anything but a set-back for the widespread adoption of VR, however it’s good to keep a sense of perspective. We’re at the very earliest days of this new type of media – we’ve been here before with television, mobile phones and countless other technologies – which started off as costly; and we’re fortunate that even now there are multiple players in the game, vying for customers.

  • Competition is a good thing; and its presence in the world of VR is extremely important. Following today’s announcement, the ball is now in the court of HTC’s Vive headset – whose pricing is yet to be announced. There is speculation that the amount of hardware required in its package (headset, base-stations and hand controllers) might force the price of the system up beyond that of the Rift – but it’s possible that HTC may be able to undercut Oculus and force the prices of headsets down far more quickly this year.
  • Early adopters always pay a premium for new technology. As the cost of components reduces, inevitably the cost of headsets will too – opening up the market to greater numbers of users. Oculus have stated that they want to make fast iterations on their headsets, which means we’ll see cheaper hardware quickly.
  • The very successful launch of the GearVR means that more affordable – and solid VR is within the reach of a vast number of customers already. While currently it’s an expensive system to buy into if you don’t already own a compatible phone, it’s pretty much a no-brainer for those who do. It represents a viable platform for developers to target.
  • Playstation VR is likely to gain a massive user-base quickly on launch, which is just what developers need. Although we haven’t heard about pricing or release date as yet, it’s likely that the system won’t cost more than the console itself, which can only be a positive thing.

Getting all emotional

Many have spent a great deal of time devoted to learning the ins, outs and possibilities of this strange new frontier over the past years, and today – even with its controversy, marks a big step toward the future we all want to see. So to the fellow developers, enthusiasts, youtubers and hardware teams out there (Oculus and Valve), I’d like to wish you all a happy new year, full of opportunity and success! I can’t wait to see what we all create next!

Update

In a Reddit AMA held last night, founder Palmer Luckey (got to admire his bravery) answered questions about what led to the disparity in expected and final cost – among lots of other useful info; an important read for anyone interested.

Thanks for reading! Follow me here or at @franbo_vr for more nonsense!

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