Luckey: "I handled the messaging poorly"

Oculus founder apologises for pricing shock, but maintains that "we don't make money on the Rift"

Oculus founder Palmer Luckey has apologised for his part in generating some of the misleading expectations on the final price of the consumer Rift headset, saying that he'd "handled the messaging poorly" when previously suggesting that the device could retail "roughly in that $350 ballpark" of DK2 development kits.

Speaking in an extensive AMA on Reddit, Luckey addressed a number of questions and concerns from gamers after the initial pre-orders for the Rift went live yesterday. Whilst many were willing to acknowledge that the $599 price tag wasn't unreasonable for a first-run of such bleeding edge equipment, Luckey was asked why the company hadn't given better guidance to potential customers on what to expect. To his credit, the young entrepreneur stepped up to take much of the blame.

"I handled the messaging poorly," said Luckey. "Earlier last year, we started officially messaging that the Rift+Recommended spec PC would cost roughly $1500. That was around the time we committed to the path of prioritizing quality over cost, trying to make the best VR headset possible with current technology. Many outlets picked the story up as 'Rift will cost $1500!', which was honestly a good thing - the vast majority of consumers (and even gamers!) don't have a PC anywhere close to the rec. spec, and many people were confused enough to think the Rift was a standalone device. For that vast majority of people, $1500 is the all-in cost of owning Rift. The biggest portion of their cost is the PC, not the Rift itself.

"My answer was ill-prepared, and mentally, I was contrasting $349 with $1500, not our internal estimate that hovered close to $599 - that is why I said it was in roughly the same ballpark"

"For gamers that already have high end GPUs, the equation is obviously different. In a September interview, during the Oculus Connect developer conference, I made the infamous 'roughly in that $350 ballpark, but it will cost more than that" quote. As an explanation, not an excuse: during that time, many outlets were repeating the "Rift is $1500!' line, and I was frustrated by how many people thought that was the price of the headset itself. My answer was ill-prepared, and mentally, I was contrasting $349 with $1500, not our internal estimate that hovered close to $599 - that is why I said it was in roughly the same ballpark.

"Later on, I tried to get across that the Rift would cost more than many expected, in the past two weeks particularly. There are a lot of reasons we did not do a better job of prepping people who already have high end GPUs, legal, financial, competitive, and otherwise, but to be perfectly honest, our biggest failing was assuming we had been clear enough about setting expectations. Another problem is that people looked at the much less advanced technology in DK2 for $350 and assumed the consumer Rift would cost a similar amount, an assumption that myself (and Oculus) did not do a good job of fixing. I apologize."

As well as offering his mea culpa, Luckey also went some distance in justifying the price tag, pointing out that the device is being sold at most at cost, and likely for less.

"To be perfectly clear, we don't make money on the Rift"

"To be perfectly clear, we don't make money on the Rift," he explained. "The Xbox controller costs us almost nothing to bundle, and people can easily resell it for profit. A lot of people wish we would sell a bundle without 'useless extras' like high-end audio, a carrying case, the bundled games, etc, but those just don't significantly impact the cost. The core technology in the Rift is the main driver - two built-for-VR OLED displays with very high refresh rate and pixel density, a very precise tracking system, mechanical adjustment systems that must be lightweight, durable, and precise, and cutting-edge optics that are more complex to manufacture than many high end DSLR lenses. It is expensive, but for the $599 you spend, you get a lot more than spending $599 on pretty much any other consumer electronics devices - phones that cost $599 cost a fraction of that to make, same with mid-range TVs that cost $599. There are a lot of mainstream devices in that price-range, so as you have said, our failing was in communication, not just price."

Asked about a ballpark figure for the touch controllers which are due later this year, Luckey said that he'd "learned (his) lesson" about making pricing estimates in a public forum. He also refused to be drawn into talking about what else the company is working on, although he did confirm that there's more going on in the Oculus labs than just Rift and touch development.

"Yes, we are working on a wide range of VR technology," said Luckey. "No, not willing to let more secrets slip here." Luckey also knocked back the idea of a cheaper model launching this 'generation', reiterating that Oculus wouldn't be sacrificing any quality for price. "A standardized system is in the best interest [of] developers trying to reach the widest audience, and we cannot significantly reduce the cost without dramatically reducing quality."

Although many expressed shock at the revealed cost yesterday, it didn't stop the first wave of pre-orders, due to be delivered to consumers in March, being exhausted within hours, causing the release date for later orders to shift to April as the company manufactures more units. In fact, the site itself struggled under the demand - exacerbated by what Luckey described as "script kiddies" attempting to commit fraud or bring the service down for genuine customers.

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Latest comments (3)

Klaus Preisinger Freelance Writing 2 years ago
There is no such thing as high quality plastic. Also those headphones do not have a snowball's chance in hell to outperfom my Beyerdynamic 770 and I would be very careful about claiming they were on the high end spectrum of possible headphone quality. Very good, yes, high end, decidedly no.
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Richard Browne Partner & Head of Interactive, Many Rivers Productions2 years ago
Can't tell if he just has a bad PR handler or just isn't that involved in the business end of things from this to be honest.
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We were lucky to interview Nate and Palmer for the book we published in 2013 at the beginning of the story – long before Oculus VR had succeeded in raising its backing and eventual surprise acquisition. From what we have research and seen from the core management of the original company, they have found the skill transition to a large corporate a difficult birthing, and sadly some have been found wanting.

Palmer is a self-taught tinkerer at heart that has moved from a passionate enthusiastic, to the position of a company figurehead. Originally un-chaperoned (until the embracement of the UK news service interview) he is now handled by Facebook – and though they have fed on his passion to promote the Oculus offering, the cracks have started to show in the difference in styles.

He has honestly tried to be open with the VR community that he has surrounded himself within, since he first asked the community for help in creating his dream of a simple and affordable HMD. Sadly, the compromises he has had to make to reach this point has been such that the linking of previous statement to the actuality vie greatly, and soon will be a greater embracement.

To be frank, the level of business acumen needed to both steer the aspirations of Oculus in the next nine months, and the leadership needed for the future of VR, require professional business hands – the level of business education, and basic knowledge of how to handle media and customer demands will prove beyond most. The question will be how many “poorly handled message” moments the Facebook board will stomach?

Edited 1 times. Last edit by kevin williams on 8th January 2016 11:53am

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