Oculus Reveals Higher Price than Expected

By Norbert Hildebrand
Oculus Rift pre Order
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The price of AR/VR headsets was always seen as one of the main hurdles for mass adoption of this new technology. For quite some time, Oculus as the poster child of the VR industry, has maintained a target price of around $350 for the headset. During CES 2016 Oculus released the final price for pre-order products and as somewhat of a surprise; the sales price is quite a bit higher than the $250 price point.

In Europe, the Oculus Rift will be offered for €699, in the UK for £499 and in the US for $599. If you are somewhat surprised by the exchange rate calculations behind this pricing, you are not alone. Based on the pure exchange rate, the $599 price tag should be more like a £425 and €550 price point. Now, price points of electronic products are never completely based on the exchange rate that is fluctuating every day, but this is quite a wide variance and reflects more what they think they can get in the market.

Source: Oculus Rift

At the same time, Oculus has stated several times that they are sorry for how they have handled the pricing announcement, but they are selling the units actually at cost (which means no profit, in my book). That the cost is so much different from the US to Europe is somewhat of a surprise though.

The pre-order price includes an X-box controller and two games, which may be not part of the deal once the pre-order makes room for regular orders. It does not include any Oculus touch controllers, which will not be available until later in 2016. To be fair, this was never said to be part of the deal anyway. However, the pre-order shipments are already slipping from Q1’16 to July 2016. Now, this could be caused by the overwhelming interest in the consumer base or just basic supply chain and manufacturing reasons. As Facebook, the owner of Oculus is a public company, we may never know. In several articles published during and after CES, the indication is that the interest in the headset has indeed be high.

Analyst Comment

If the price of the Oculus Rift headset is indeed around $599 (forget the exchange rate for a moment), the time for VR to reach mass adoption will be longer than expected. As no one has yet tested a production headset outside of an Oculus-controlled environment, we have to wait to see how high the satisfaction will be from a performance standpoint. The units that have been around for demonstrations on exhibitions have not been the greatest, so far. They also clearly demonstrate that VR quality is greatly influenced by the content, which is ultimately out of the hand of Oculus.

Many have said that the price of a VR headset needs to be below $300 to become a mainstream product. I believe that this is not necessarily true. However, VR will not be a main stream product in this year for many other reasons; the most important one is the lack of understanding of the technology by the public as a whole. A huge undertaking that even Google gave up upon (in the AR field of course).

In order to be a successful product in coming years, production costs have to come down to the $100 range, to allow selling headsets in the $300 range. There is lots to do to achieve this. (NH)

As Steve points out in his comments on VR at CES (CES and The Upside of VR), it’s not just the cost of the headset that needs to be taken into account, the headset needs to be powered by a high end gaming computer with top 3D performance. (BR)