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Roundtable: Rift's $600 aftermath

By GamesIndustry Staff

Roundtable: Rift's $600 aftermath

Thu 07 Jan 2016 3:34pm GMT / 10:34am EST / 7:34am PST
Virtual Reality

Does Oculus' premium price point hurt the headset's chances of success? Could it hold back VR as a whole? The GI.biz team weighs in

Oculus yesterday announced that the long-awaited Rift VR headset will cost $599 when it launches in March. That's a significant step up from the $350 the company was charging for dev kits, but the consumer version of the headset will come with an Oculus Remote input device (not to be confused with the delayed Oculus Touch), an Xbox One controller, and two games: EVE: Valkyrie, and Lucky's Tale.

It's probably a little more than what people were expecting or possibly hoping for from the first major contender in the new wave of virtual reality headsets (with apologies to Gear VR), especially since a computer with the specs to run Rift games is a substantial expense in its own right. But how much does that matter? In the long run, does the $599 price hurt the Rift? Is there any chance it could damage the new wave of VR as a whole? The GI.biz roundtable weighs in, and shares whether or not they're planning on picking up Rifts of their own.

James Brightman

I'll be honest, $600 doesn't affect me one way or another. As much as I'd love to get an Oculus Rift, that was never going to happen. I work on a Macbook Air and don't own a high-end PC. There's no way I was about to spend another $1000 or more to acquire that PC anyway. My initial reaction to the price point was along the lines of, "What? Have they all gone insane? Don't they remember PS3's launch?" In fairness, though, new fancy technologies almost always sell at a premium. Look at how much people spend on iPhones. Oculus is looking to usher in a new kind of computer-human interaction, and that was never going to be a mainstream effort from the start.

"I don't think the $600 price is going to harm Oculus or VR's prospects over the long-term, but it certainly isn't helping in the short-term."

The initial wave of Oculus buyers will be hardcore PC gamers who probably already have the necessary hardware and think nothing of spending hundreds on new graphics cards all the time. For those people, $600 gets them a pretty sweet VR bundle with two games and a controller. They've been waiting for this moment and were going to pre-order regardless. For the rest of us, we'll simply have to wait for the price to drop, as it undoubtedly will.

I don't think the $600 price is going to harm Oculus or VR's prospects over the long-term, but it certainly isn't helping in the short-term. Remember, the console crowd will be getting their chance with the PlayStation VR, and that will likely sell for a good deal under $600. We also don't know how much the HTC Vive will sell for, but now that Oculus has made its move, there's a good opportunity for the others to undercut the Rift at a better price point. For people like me, the simplicity of a console and the plug-and-play nature of PlayStation VR was going to win out from the start. My larger concern, from an industry perspective, is if the $600 price tag limits the initial adoption of VR overall, it could make life very difficult on a number of studios who've dedicated themselves to the technology and need to get a return on their investment sooner rather than later. Jobs and livelihoods could be at stake.

Rachel Weber

$600. Ouch. The price tag has comes as a bit of a shock, but I do feel some sympathy for Oculus VR. It's the first of the high-end virtual reality headsets to name a price and it has the added pressure of being seen as the pioneer in the space. If you want to maintain your position as standard bearer for a medium you can't afford to bring out anything less than your best product.

"The mistake Oculus did make was not managing expectations when it came to that price."

The mistake Oculus did make was not managing expectations when it came to that price. The dev kits sold for around $350, and Palmer Luckey had hinted we could expect something in the "ballpark" for the final price. People settled with that price in their mind, they had conversations with their partners where they explained they'd probably pay $400, they looked at their bank accounts and figured they could probably make it work. When you're a bunch of top tech executives, when your company sold for $2 billion, it might feel like an extra $200 isn't such a big deal. It is.

Oculus has already sold out of day one pre-orders and the Rift will continue to sell, even at $600. There are plenty of rich people who want shiny new things and there isn't much newer than the Oculus Rift right now. The bigger challenge will be keeping the interest of the audience it's cut out of early adoption with the high price tag. Those people, myself included, are fans, huge fans, who now have to wait for a price drop until we can afford a headset and the necessary PC upgrades - video card, processor, some sort of USB hub for the four the headset require. (Yes, four, count your spare USB ports on your computer right now.) We'll probably wait, but we could just as easily be distracted by HTC and Valve's Vive due in April. HTC has been smart enough to warn that it's a premium product, (read pricey) so you can't expect cheaper, but you can expect competition. As for PlayStation VR if I was Sony I'd be using the might of my manufacturing power to ensure I could offer a $600 PS4 and PlayStation VR bundle. Who needs PCs?

The price will come down, tech always does, and developers who have staked whole studios on the medium will need the install base to go beyond rich nerds with massive wallets but minimum gaming time.

Dan Pearson

First things first: $599 is a fair price. Not a mainstream consumer price, but far from the gouge that some are decrying it as. The Rift is a high-end, bleeding-edge piece of tech which is yet to be manufactured at the sort of scale which will make it possible to sell at a broadly acceptable price point and $599 is an eminently reasonable cost - especially when Oculus doesn't have any obvious way of scraping a long tail of revenues from licensing or app store cuts, unlike both Valve and Sony. That said, Luckey's allusions to the relative cost of phones, TVs and other luxury consumer electronics are all well and good, but they all have far wider appeal than a device which is still very much in the emergence phase and don't really bear direct comparison.

"$599 is an eminently reasonable cost - especially when Oculus doesn't have any obvious way of scraping a long tail of revenues from licensing or app store cuts..."

The thing is, it's not really Oculus' fault that everyone expected the Rift to be marketed at everyone with an above average graphics card and a desire for solitude. Although they've not gone out of their way to counter any of the hype in the media (and why would they?) Facebook's marketers didn't plant the seeds of VR-for-everyone overexcitement, either - that was the games media, hungry for a new filigreed figurehead to strap to the bow of the good ship Gaming. In fact, Luckey and Zuckerberg (Zuckey? Luckerberg?) have both openly stated that VR isn't a mainstream tech, that it won't be for years. One day, they expect it to be as comfortable and accepted an interface as monitors are now, but the initial run is for enthusiasts, early adopters, people whose Joneses are harder to keep up with - and there are evidently more than enough of them to make a run of $600 headsets a viable idea.

I can't afford one, and I have a PC that would take the strain, but I don't feel betrayed by the price - it's just another shiny gewgaw that won't be in my house until it's cheaper. A word of warning for anyone who's holding out for Valve to undercut the Rift, though - the Vive is almost certainly going to be this generation's 'premium' device, maybe selling at $750 or more with controllers. If you want more affordable VR in the immediate future, keep an eye on Sony, but don't blame Oculus in the meantime.

Brendan Sinclair

Well this doesn't help. I'm still not sure VR is ever going to be the sort of market that's worth buying one's way into for $2 billion, but it seems a little less likely to me now than it did before Oculus revealed its price point. Yes, early adopters will buy the Rift anyway, and yes, the prices will come down to more mass market-friendly price points in the future.

"I'm a little worried that instead of the next big thing, VR could go down as the next 3D TV."

But VR needs help getting around a chicken-and-egg problem. It needs great content to build an installed user base, but it needs an installed user base to justify developers investing in great content for it. Despite the participation of giants like Valve, Sony, and Facebook, I don't see many content creators creating VR experiences that would sell even a modestly priced console, much less a $600 headset and a $1,000 PC.

I'm a little worried that instead of the next big thing, VR could go down as the next 3D TV. The technology works great, and it allows for some wonderful experiences, but it's a novelty to most, and there simply isn't enough content made for it to justify the price of admission. I still believe VR has plenty of room to avoid that fate, but at first blush, the Oculus' price point seems like a step down the same path.

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16 Comments

Aleksi Ranta Product Manager - Hardware

384 305 0.8
Another worry that i have is that where will people get to experience Oculus's hardware hands on? I mean the regular joe and jill.
VR is a thing you need to see for yourself and be impressed (or not) which makes the pricepoint easier to sell than just on paper.
Ofcourse there are shows people can go to but i was worried about the lack of a physical distribution plan or message from Oculus other than it will be available selectively in some retail stores....

Posted:8 months ago

#1

James Brightman Editor in Chief, GamesIndustry.biz

300 565 1.9
That's a good point as well Aleksi. It's very hard to communicate what a great feeling good VR is. And setting up a demo station for it at retailers is likely a lot harder than it was for say the original Wii, which was instantly intuitive. Like the Wii though, VR as a whole needs a major media push. VR companies like Oculus need to be on Late Show with Fallon, Colbert, etc. They need mainstream news media playing with it on the air and gushing. It's what helped the Wii gain so much traction.

Posted:8 months ago

#2

Neil Young Programmer, Rebellion Developments

353 481 1.4
"In fact, Luckey and Zuckerberg (Zuckey? Luckerberg?) have both openly stated that VR isn't a mainstream tech, that it won't be for years."

Not always:

http://allthingsd.com/20130606/oculus-co-founders-luckey-and-mitchell-on-the-rifts-progress-price-and-limitations-qa-part-one/

"If something’s even $600, it doesn’t matter how good it is, how great of an experience it is — if they just can’t afford it, then it really might as well not exist. We’re going for the mainstream, but time will tell what the market is."

Posted:8 months ago

#3

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,520 3,218 1.3
To further what James noted, Wii had major software to push it prior to and after launch. So far, OR doesn't have that. Getting the word out is part of the battle but having the market excited for the software is another. Price is the 3rd element and that's now a bigger problem than most people expected. So currently, they don't have any out of the 3.

I suspect the Facebook marketing machine will go into full effect soon and that will help some but as James noted, they need a physical demo plan to go with it.

Posted:8 months ago

#4

Jordan Lund Columnist

118 256 2.2
$600 isn't a dealbreaker. $600 + the price of a new computer is....

Unless there's a killer app, and so far I haven't seen a killer app for VR of any type.

Gameboy had Tetris. 3D graphics cards had Doom. The Xbox had Halo.

VR has... ?

Posted:8 months ago

#5

Julian Williams Founder, WIZDISH Ltd.

158 185 1.2
I would be curious to know what the reaction would have been if the price had been $399? Next question would be when that might occur?
Its a small bonus but if the high price makes them attainable it will help those who 'want them most'. By that I mean experiential marketeers and other professionals who will reach many more members of the public than individual buyers and thus help promote VR. They have really struggled in the past and often resorted to buying Rifts on eBay. I realise they weren't meant to be using them and it's not a major plus.
Is a Killer app is essential at this point? Angry birds came along some time after the iPhone.

Edited 2 times. Last edit by Julian Williams on 7th January 2016 11:30pm

Posted:8 months ago

#6

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,520 3,218 1.3
Popular Comment
Julian, iPhones killer app was it was a phone. VR doesn't have a mass market feature to generate a default install base or 2 year contracts to amortize it.

The problem for initial developers is that if critical mass doesn't happen soon enough, they lose big money and follow up developers will hold back because of the early losses.

Posted:8 months ago

#7

Renaud Charpentier Game Director, The Creative Assembly

90 230 2.6
VR still has many huge limitations: no rich controls, isolation from the real world, complex physical setup, tiring usage, single user experience. If you add to that a high price of entry and immature games I don't see it becoming more than an enthusiast market in the years to come.

The predictions of tens of millions of units in a year then hundred of million of them seems as realistic as social gaming taking over the world, Kinect replacing your pad and 3D TV becoming the default format. Big hype in 2016 then hard landing back to reality in 2017. Might be ready for real mass usage in 5-10 years, but there are still many massive usability limitations to solve.

Posted:8 months ago

#8

João Namorado Project Manager, Portugal Telecom

72 78 1.1
Is it just me or does it seem like there is no "solid" production and distribution channels in place? The store says estimated shipping is now in June and statements about pricing in Europe suggest high shipping costs and import taxes. This reinforces the point Aleksi was making about how would people get to experience the Rift: you really have to experience it to get excited about it and it seems it will be difficult to try one out for quite some time.

Posted:8 months ago

#9

Klaus Preisinger Freelance Writing

1,491 1,882 1.3
This is not the $600 aftermath, this is merely the prequel to the retail saga of VR.

The real pants down moment is when all three current competitors get listed by the big distributors, such as Ingram Micro. Because then shops will know what they can expect to earn, or whether OcRi & Co pull an Apple and start renting shelf space instead. Then we shall know how companies believe this VR thing will sell; by itself, by sponsored demo kiosks, or by evangelist stores actually earning money selling these things.

Palmer Luckey was eager to appease the pre-order demographic, but the comment about his profit margin might already have angered the next group. Unless he was not telling the truth, in which case this will come back as a boomerang, when suggested retail and the price at which distributors sell it to point of sale actually do include a profit margin.

Right now, we have an online shop with odd currency conversion and unclear messaging from where the package is being sent. In Germany, if you get an item from the U.S. with a 700€ bill attached, then that's 133€ in customs taxes on top of that. That 833€, if the documentation is up to standards. If not, your friendly customs officer will also tax the 41€ shipping costs. In that case, online pre-orders will have paid 880€ to get an OcRi around the same time IngramMicro lists it for 588€ without taxes. Ouch.

Posted:8 months ago

#10

Julian Williams Founder, WIZDISH Ltd.

158 185 1.2
Popular Comment
Jim, regrettably I have to agree with you. Part of me is pleased that they've had the guts to go ahead and start delivering but I'm as worried as Klaus about the total cost of ownership. We have to take one step at a time but I'm also genuinely concerned about the lack of locomotion (and not just for personal reasons). If these things get a reputation for gathering dust it won't help the cause.
I'm surprised nobody at Oculus thought to correct the impression they'd given but maybe that's partly due to the odd way a lot of the tech press operate? Honest, rational statements aren't deemed newsworthy so the most publicity is often given to the biggest liars, whether that be Kickstarter projects or analysts predictions.
I've no doubt these things are expensive to manufacture so I guess the subtext to this is how big a bet do Facebook want to make on VR. Are they willing to subsidise every Rift to capture the market?

Posted:8 months ago

#11

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,520 3,218 1.3
Popular Comment
Spot on, Julian. Oculus Rift has to hit the ground running and meet the key market factors for success or it will go the way of 3DTV because few are willing to take the losses (developers and consumers). Those up front developers are probably seething right now. They paid $350 and likely expected the market would pay the same. So they based their futures on the market uptake they expected (along with the insane media and analyst hype that pushed VR like a drug cartel). And now that's not likely to happen at the rate they were willing to pony up money for. Those developers that took and wait and see approach are patting themselves on the back for being cautious and fiscally prudent.

I also expected the Facebook purchase to mean subsidizing but apparently it doesn't. This whole thing could have been handled better.

Posted:8 months ago

#12

Aleksi Ranta Product Manager - Hardware

384 305 0.8
AND Software developed for the Oculus wont/doesnt need to be exclusive to the OR store. So thats their sales platform pretty much gone the way of the dodo then?

Posted:8 months ago

#13

Julian Williams Founder, WIZDISH Ltd.

158 185 1.2
While it may look a bit bleak I'm wondering to what extent Oculus are relying on clawing back money from a split of the game revenue?
As has been pointed out Facebook don't make money by selling software to customers, they make it by selling the customers to advertisers.
So they've decided to man up and go first with pricing and delivery. They could now discount having positioned it as a premier product, but can wait for the others to decide how deep that discount should be.
A lot has been made of nVidia saying that less than 1% of PCs are Rift ready (how many of those are for gaming and how many only need a graphics card upgrade?). But wasn't it nVidia who announced their next gen cards, available in the summer, will be 10x more powerful than their current range? Won't a lot of people therefore be waiting as long as possible to upgrade their PCs?
I'm just putting a few thoughts out there in the interests of this stimulating debate.

I keep remembering that Mark Zuckerberg has been very successful at spotting business models no one had seen and most of us still don't understand. He has also had all that experience with Facebook gaming. Maybe they have a plan?

Edited 2 times. Last edit by Julian Williams on 9th January 2016 2:17pm

Posted:8 months ago

#14

Bob Johnson Studying graphics design, Northern Arizona University

39 72 1.8
I'm with Brendan. Big catch-22.

MS couldn't even sell enough customers on paying a mere $100 more for a console with built-in Kinect before they had to change.

The market for VR is probably more analogous to the market for a triple monitor setup.

Edited 1 times. Last edit by Bob Johnson on 11th January 2016 8:02pm

Posted:8 months ago

#15

Greg Wilcox Creator, Destroy All Fanboys!

2,603 1,678 0.6
I do wonder how much "granny squad" testing of VR has been going on over the last year or so? As in getting a busload of grannies (or other suitable gamers, non-gamers, and/or casual types) getting them to a public place and letting them get a goggles-on demo.

I know Marriott Hotels did a series of press roadshow Rift tours where they had a glass booth out of a sci-fi flick with a set of Rift goggles, a tilting platform you stood on and a fan and water spray setup above the booth. It was something like a 2 or so minute experience but came off as more of a sales gimmick for Marriott than a great Rift demo (no gaming involved, just standing there as the platform moved from a hotel bar to to locations, a "wind" blew and you got a light misting on the beach).

At the end of the day, VR is SOLD (and how!) to most enthusiasts out there. The real test comes when people who normally wouldn't go near it want to BUY it (after getting some hands-on time with it), not just go back home and forget all about it because they got a "meh!" feeling or just didn't get what the fuss was all about.

Posted:8 months ago

#16

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