Oculus Claims it "Isn't Making Any Money" on $599 Rift

[Steven Bogos]

Oculus Claims it "Isn't Making Any Money" on $599 Rift

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Oculus founder Palmer Luckey took to reddit to justify the hefty $599 price tag of the Rift.

Yesterday, reddit [http://www.escapistmagazine.com/news/view/165758-Oculus-Rift-Price] to try and justify the high cost to his fans, explaining that even at $600, Oculus isn't actually making any money on the Rift.

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

As for what does significantly impact the device's cost, Luckey explained that "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."

The rest of Luckey's AMA [https://www.reddit.com/r/IAmA/comments/3zt7ul/i_am_palmer_luckey_founder_of_oculus_and_designer/] talks about his plans for the future of the Rift, but unfortunately doesn't mention a price drop any time in the near future. This makes me worry that the Rift will just become another expensive tech gimmick that not enough developers will take advantage of to justify the price (oh hi there, PlayStation Move and Xbox Kinect!)

Source: reddit [https://www.reddit.com/r/IAmA/comments/3zt7ul/i_am_palmer_luckey_founder_of_oculus_and_designer/]

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[aceman67]

We're sorry, the next hype-train is delayed due to the Oculus Express derailing over a cliff...

I'm actually waiting for someone to take this one apart and doing a price-per-part analysis to see if they're really not making a profit.

 

[Zhukov]

Well that's torn it.

Nothing attracts developers quite like a tiny install base. Half of whom can't use their expensive toy longer than 10 minutes without getting motion sickness.

 

[JayRPG]

Something tells me that Sony is going to jump on this opportunity very quickly, it's the Xbox One vs. PS4 launch all over again.

MS: "We are all online, to share games you add friends and step 2, 3, 4, 5, 6, and 7 allow them to play it for an hour"
Sony: "Here's how to share games with your friends... here you go"

Oculus: "We aren't making any money at $599 (almost $1000 AUD with it's increased pricing btw), it's expensive to make!"
Sony: "Our Morpheus VE headset will cost $299, meaning gamers who choose the play on the PS4 will get the same experience for a much cheaper price"

$299 may be a stretch but it wouldn't surprise me if Sony announce the Morpheus will cost hundreds of dollars less than the rift, and announce it very soon.

 

[Jamash]

$600 isn't that much in comparison to the price of the rest of the PC hardware you'll need to run games at a high enough framerate and resolution for a passable VR experience.

The chances are that if you've spent enough money on your computer to run games at 180fps, then $600 for VR will be a drop in the ocean.

On the flip side, people who can't afford $600 for the Rift probably wouldn't have a powerful enough PC to utilise the Rift anyway, so they wouldn't spend $600 on a peripheral that their sub-par PC would render near-useless and make them feel sick due to not being able to run games at the required framerate, so really these potential customers they're losing at the $600 price tag weren't actually potential customers in the first place.

To me, baulking at the price of the Rift is like baulking at the price of a new set of decent tyres for your $500,000 Supercar, and I don't understand how anyone could have ever believed that a decent VR experience that lives up to the ideal would ever be cheap.

Sony's Playstation VR is going to suffer similar backlash due to not managing expectations about the price of the hardware and I've read a lot of customers expressing that they believe it should only cost around $150 in a bundle with 5-6 of it's best games.

However, I also think Playstation VR is going to suffer from more backlash than just the price of the hardware as I've read anecdotes that indicate a lot of people don't understand the massive hardware and framerate requirements for a decent VR experience and they believe that the Playstation VR will somehow allow them to run their 30fps AAA games at 120fps in full VR simply by virtue of plugging it in.

 

[Nazulu]

This doesn't look like it's going to last. I can buy a good computer for that much for fucks sake! Then again, many people seem to throw away money on 'special' deals and micro-transactions all the time, so bring on the whales!

 

[pookie101]

just had a look at the list of compatible games and yeah.. think ill skip it

works out i would be spending $250 AUD for each of the 4 compatible games i own to play them on VR. i like eurotruck simulator 2 alot but i dont like it enough to spend $250 on it.

so ill wait for VIVE, that seems like a better option tech wise for me, depending of course on price but i think ill be waiting a while to see if the price comes down on VR

 

[Kameburger]

Lets be honest, as soon as the Oculus was sold to Facebook, it really stopped becoming just a gaming device. Facebook will certainly be trying to integrate some sort of VR interactive communication technology rightfully so. meaning that the price point is not really targeting gamers as much as it maybe targeting early iPad or Apple watch adopters. It will get attention from gamers for sure, but who knows where it will end up.

 

[Hairless Mammoth]

I don't think a lot of people care if the Rift "isn't making any money" when the price just skyrocketed (especially considering the Farcebook buyout). I'm sure a lot of people with capable PCs, but on a budget, were saving up for a Rift and just found out they'll be waiting much longer. $600 might even be a real kick in the pants for Oculus since anyone with limited funds and a brain will wait for price drops, a real reason to own one (read: games that support it well), and probably word from the competition on what they will charge for their headsets.

They really should look at the long term. If selling units at loss means building the install base faster, then developers will want to make more VR compatible games, which will increase demand for more headsets and get the brand recognition for the Rift if they can put their brand in the games' selling points. I thought the Facebook buyout was partially to get the cash to do just that.

Now watch as Sony and/or HTC/Valve manage to offer their products for at least $100 (probably less for PS VR) below Oculus and include any funny touch controllers in the price. If the Vive with its lighthouse mumbo jumbo will be cheaper, the Rift's price will be laughed out of the shops.

 

[Xyebane]

I imagine HTC is priced the same, though quite frankly Sony should be a lot cheaper, because the PS4 can't run the resolutions and framerates that the Vive and Oculus need to make sure you don't vomit. I imagine it will be a pretty grainy experience.

The price point has really put me off though, i wish they would strip out all the bullshit extras. If it didn't have the headphones, controller and free games could I have it for $100 less?

 

[Revolutionary]

For those of you at home that's over $900 AUD after shipping. Quite the pretty penny
[link ="Conversion"]https://www.google.com.au/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#safe=off&q=650+usd+to+aud[/link]

 

[Adam Jensen_v1legacy]

I don't care if they're making any money. That fact won't magically make me think that it's not too expensive. I wouldn't pay more than $300 for it.

 

[Fdzzaigl]

I might be inclined to believe him. But how the hell is this thing ever going to take off if even at that pricetag the sales of your product can't really support your company?

 

[Janichsan]

This makes me worry that the Rift will just become another expensive tech gimmick that not enough developers will take advantage of to justify the price (oh hi there, PlayStation Move and Xbox Kinect!)

It already became clear that it will be little more than a gimmick for a small niche when the system requirements were published. People with such high performance machines are only highly enthusiast gamers, which are a quite small fraction.

 

[Cowabungaa]

I might be inclined to believe him. But how the hell is this thing ever going to take off if even at that pricetag the sales of your product can't really support your company?

Now that they're under Facebook's wing they'll probably get subsidized. That happens more often with cutting edge or high-end goods and services that aren't really ready to be mass-marketed yet but would still appeal to a small group of early adopters. It's a way to build a brand identity, being on the cutting edge of technological developments, etc.

To me, baulking at the price of the Rift is like baulking at the price of a new set of decent tyres for your $500,000 Supercar, and I don't understand how anyone could have ever believed that a decent VR experience that lives up to the ideal would ever be cheap.

Yeah, that seems like a good analogy.

 

[Smooth Operator]

Well if they are ordering custom displays / tracking electronics and optics then the price isn't that crazy, all their previous stuff was using already available smartphone parts which made it pretty darn cheap for what it had.
Never the less that price makes it a very specific rich man toy, an ordinary working pleb needs to save up a good long while to have a high end PC, $600-800 is pretty much most of your PC budget and to spend that alone for a peripheral which might work with a handfull of games is a huge waste.

Of course if you are loaded this isn't even remotely an issue and for a couple of years that will be their clientele.

 

[Rattja]

Personally I don't find the price to be all that bad, especially when you stop to consider how cutting edge tech tends to work out.
Nothing that is of decent quality and brand new is ever cheap. Computers was not, nor was smartphones, so why should this be any different?
I also believe that as the years go by and we get better at this, cheaper versions will start to pop up.

Also, having tried the thing and understanding some the possibilities it offers (the 3d drawing looks very appealing to me) I see it as more than just another screen thing or a simple addition, it's something else entierly. It allows you to do things no other screen could ever do, and that to me is worth the price of a console or a cheap PC. Wether or not developers will manage to use that potential remains to be seen, but I have faith in this.

Also compared to things like the newest Iphone, it is really not that bad, and lord knows those things sell.

 

[mad825]

Personally I don't find the price to be all that bad, especially when you stop to consider how cutting edge tech tends to work out.
Nothing that is of decent quality and brand new is ever cheap. Computers was not, nor was smartphones, so why should this be any different?
I also believe that as the years go by and we get better at this, cheaper versions will start to pop up.

Also, having tried the thing and understanding some the possibilities it offers (the 3d drawing looks very appealing to me) I see it as more than just another screen thing or a simple addition, it's something else entierly. It allows you to do things no other screen could ever do, and that to me is worth the price of a console or a cheap PC. Wether or not developers will manage to use that potential remains to be seen, but I have faith in this.

Also compared to things like the newest Iphone, it is really not that bad, and lord knows those things sell.

the comparison is bad, bad is the comparison.

Oculus was funded by the public and then got a huge investment boost from Facebook. One should expect them subsiding some of the manufacturing costs (or at least free fucking delivery), I dunno what they spent all that money on but it all for sure go on Oculus.

The high price point for most new tech is so that companies can gain back some of the investment costs (R&D) for the product.

 

[Cowabungaa]

TotalBiscuit just put a pretty solid and reasonable analysis of the whole pricing issue:


And it also made repeated the point, namely what you actually get for that $599 is:

- The goggles themselves.
- An audio device.
- An Xbox One controller.
- A media remote.
- Two games.

Now whether you want all the extras is a good question, but it does explain the package price. Detract the audio device, controller, media remote and the games and I don't think it's unreasonable to see the price of the goggles themselves as about $450. And that can, I think, be called in the 'ballpark of $350.'

To be honest, I don't really believe them when they say all that stuff doesn't really impact the cost. Imagine them bringing out just the goggles themselves later down the line, because packages like this often happen when new tech comes on the market for the first time. Do you really think the goggles alone with only, say, be $50 cheaper? They couldn't get away with that.

In the end it's a piece of early adopter tech, and TB's comparison to stuff like 4k screens seems apt. Relax folks, nothing out of the ordinary here.

 

[Dornedas]

Ah yes they don't make any money.
And because they are so committed to not making any money they decide to charge over 100$ more if you live in Europe.