Oculus Rift Creator Defends "Obscenely Cheap" $600 Price Point
"We are not making money on Rift hardware."
Following Oculus VR's announcement today that the Oculus Rift consumer model will cost $600 when it launches in March, creator Palmer Luckey has now defended that price point.
Writing on Twitter, Luckey said Oculus VR is not making money on Rift hardware, adding that $600 is "obscenely cheap" for what the package offers.
To reiterate, we are not making money on Rift hardware. High end VR is expensive, but Rift is obscenely cheap for what it is.— Palmer Luckey (@PalmerLuckey) January 6, 2016
@DastardDurango It is obscenely cheap in the same way a $599 120" 4K OLED TV would be obscenely cheap - more for 599 than most products.— Palmer Luckey (@PalmerLuckey) January 6, 2016
It's not uncommon for platform-holders to sell their systems at losses, overtime recouping the costs by selling games and peripherals, which are historically higher-margin.
Luckey will answer even more questions--probably a lot of them about pricing--tonight during a Reddit AMA session. It is scheduled to begin at 6 PM PST / 9 PM EST.
In a note to investors today, Colin Sebastian of Robert W. Baird said $600 is on the high end of what he was expecting and that the premium price point suggests the headset will have a "slow ramp."
"Despite the significant hype and growth potential for virtual and augmented reality platforms, we continue to believe that Mobile VR platforms (e.g., Google Cardboard, Gear VR, etc.) will gain faster momentum, with expensive headsets initially limited to technology 'early adopters,'" he explained. "For comparison, we note that Oculus Rift is priced well above video game consoles (PS4 and Xbox One are in the $300 range). As such, we expect the installed base of high-end VR platform to ramp gradually, and not penetrate the mass market likely until 2017-18 as price-points fall below $400."
In other news about Rift's consumer model, Oculus has detailed everything that comes in the box.
Additionally, Luckey says there were a number of fraudulent orders placed when the headset went up for sale this morning. As a result, your ship date may get moved up.
Some people may see their ship date move forward as fraudulent orders in queu are weeded out. Hang tight.— Palmer Luckey (@PalmerLuckey) January 6, 2016
What do you make of the Rift's $600 price point? Let us know in the comments below!