What a $600 Oculus Rift Means for the Future of Virtual Reality

Back in October of 2015, Oculus founder Palmer Luckey responded to rumors that Rift would cost $350. To help mitigate any potential pricing backlash, Luckey told reporters that their VR headset would cost more than $350, but would be roughly in that ballpark.

Now that Rift is available for pre-order we know what that ballpark is. It’s $599 before taxes, shipping, and it includes and XBOX controller, but not the Touch tracking controller. We can be fairly certain that most people weren’t expecting this price point when we were told that $350 was too low but in the ballpark, and the Reddit Oculus and VR subreddits are awash with angry members decrying the headset as too expensive.

Screenshot (8)Sticker Shock

I’ve never much been a fan of how gadgets are valued online. I find the discussion pretty toxic when geeks try and grade something as being “worth it”. The second that phrase pops up, you can almost always find a radical justification for why someone isn’t going to buy a product.

I would buy this bleeding edge piece of technology if it instantly came with one hundred games, did my dishes, had month long battery life, and only cost $17 and a half a ham sandwich. Then it would be worth it for the monies.

While the above is an exaggeration, the tone of this kind of commentary often lands just shy of “a company failed me by making a product too expensive for me, so I will punish them by not buying said product”. I think it’s a defense mechanism. It’s not that the individual is cheap, or they can’t afford it, they would totally buy the thing IF it were worth it. Totally…

Where does Oculus fit in this market though? $600 is where we might find a nice UHD computer monitor. It’s also where we start moving to high end PC parts like beefy video cards and faster processors. Oculus is positioning Rift as a high end VR solution, they even provide a tool Windows users can download to see if their PC’s can handle Rift properly. Free from previous speculation on developer kits, and Luckey’s wonky “ballpark” comment, it would make sense that one of the first premium consumer offerings for Virtual Reality would land at a price similar to high end PC parts, as it takes a higher end PC to actually drive the headset.

Chicken or the Egg

The big question with VR is consumer adoption. Will consumers pick up expensive hardware if there isn’t a lot of software at launch? Will developers produce content for a hardware platform if consumers aren’t buying a lot of them? Oculus has been the most visible company in this space, especially after they were bought by Facebook for $2 Billion, and many are hinging the success of an entire industry on the success of this company.

In this climate, it’s not always a good thing to be first. Consumers are extremely risk averse, and they need to see progress from a company and an industry. Early pre-orders will ship in March, and current pre-sales won’t ship until May. Five months is a long time to have a customer wait out this purchase as the rest of the industry moves forward. VR  solutions arriving soon from Sony and HTC will put more pressure on people’s wallets.

Positioning Rift opposite high end monitors and PC parts pushes the product out of more casual reach. Consumers not looking to experiment with their entertainment dollars are more likely to pick up a tablet and a nice pair of headphones. They’ll be more likely to pick up a game console and a couple games.

That means early adopters with some money to burn will be responsible for the first wave of sales and will also be tasked with evangelizing the product. Those individuals need to be WOWed with a first generation product and first generation software.

We really should be keeping expectations in check for any new product. Smartwatches for example suffered a poor fate with too much hype and poorly explained feature sets. Consumers expected a smartphone on their wrist, but instead they got a wearable notification system that also tracked their steps. Virtual Reality is at risk of a similar hype bubble burst. If early adopters have a difficult time explaining their investment to friends, the entire industry might fall into “wait and see” mode. It’s fantastically difficult to claw out of that trap. People continue to raise expectations as to what they feel will be “worth it”, and each product release will fall just behind what a consumer’s threshold for buying might be. It’s tricky psychological territory.

Rift Getting Squeezed

Rift will face competition from other providers looking to offer up high quality solutions. HTC could make a dent by trying to slide their Vive headset in under Oculus’ price point. Sony has a lot of clout in gaming and could leverage their Playstation brand to offer more value.

For most people, their first experiences with VR will likely come from their phones. Google is working quickly to improve their Cardboard VR platform. Any phone in an inexpensive headset will offer up a decent immersive environment. Companies are starting to build nicer Cardboard compatible headsets, and Oculus partnered with Samsung to produce the Gear VR which uses Galaxy phones to power the headset. The “high end” for this VR market is around $100, but well built phone cradle headsets can often be had for under $50.

If developers are looking to reach the broadest possible audience, they might push more effort to lower end solutions. Many MANY more people have VR capable smartphones than premium high end headsets.

VR is already facing competition at the bleeding edge of the market as Microsoft is moving to Augmented Reality with their HoloLens project. While it’s not a direct competitor to VR, AR is starting to occupy more of the techie “cool factor” conversation that VR enjoyed when Oculus started sending out developer kits. There’s more immediate practical use for AR in drafting, 3D modeling, science, education, health, and gaming. The most exciting VR applications showcased tend to be gaming or multimedia focused.

Buy or Don’t Buy?

There’s a certain level of exhaustion which happens with new tech. We geeks spend a lot of time hyping new things, trying to explain to resistant consumers why they might want to try something new, then waiting on the industry to deliver on their promises. A lot of tech is sold on the potential of what that platform will eventually deliver.

We’ve been talking about Rift for two years and now we have a hard delivery date. The challenge for Oculus is to lock in people’s money and deliver an outstanding product which motivates those early adopters to show off their $600 headset, encouraging “wait and seers” to also invest in the hardware.

Now we wait for March to see how Rift fares with those spending bigger bucks on a real, consumer facing VR solution. Those first reactions, reviews, Youtube videos will decide for many others whether they stick with later pre-orders or hold off until the VR market has matured.