Palmer Luckey tackles the Oculus pricing: “we don’t make money on the Rift”

This week the household name in virtual reality – the Oculus VR headset – went on sale for an expected June ship date. For many people this was excellent news, until they read the rather steep $600 (R9 563) price tag which accompanied it.

While first generation tech is usually accompanied by steep pricing, many consumers expected the Rift to come in at around $350 (R5 595) due to past interviews with the Rift’s creator Palmer Luckey.

On social media the world seems to be in two minds about the issue with the #Rift hashtag (and many others besides) being used for everyone to voice their opinions.

To try and put some water on the latest internet fire, Luckey took to Reddit to partake in an Ask Me Anything (AMA) session which, at time of writing, is only five hours old and has nearly 6 000 comments. Unfortunately, the moderators of the post have deleted many valid questions, valid questions have been edited into jokes and the entire endeavour is in shambles.

We waded through and found the pertinent questions about the pricing of the Rift, which you’ll find below:

Reddit user’s question: The price is what it is, I understand bleeding edge electronics are expensive. My question is: why was the messaging about price so poor? $599 is not in the ballpark of $350.

Palmer Luckey:  I handled the messaging poorly. 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 recommended 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.

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 [the second developer kit] 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.

To be perfectly clear, we don’t make money on the Rift. 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.


In what ‘ballpark’ can we expect [Oculus] Touch’s price to be?

No more ballparks for now. I have learned my lesson.


Can we expect to ever see a cheaper, stripped down Rift SKU (minus the Xbox controller, headphones, games, etc)

Very unlikely for the first generation of Rift. A standardized system is in the best interest in developers trying to reach the widest audience, and we cannot significantly reduce the cost without dramatically reducing quality.


What are your plans in the future to make this product more affordable to the average person?

Continue working with GPU and CPU manufacturers to optimize for VR, thus reducing the required hardware cost. Use economies of scale and the passage of time to reduce the cost of good enough PC hardware. For the average person, the PC is by far the biggest cost, not the headset – the end goal is to make sure people can use the PC they already have in most cases.


What is your response to this, in which you said “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?”

Landscape changed a lot, and we are in a better place to do what only we can do.

How many rifts have been pre-ordered?

Can’t say, sorry. Financial disclosure regulations and stuff.

[Source – Reddit, Image – SeffMason on Reddit]


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