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What developers, analysts think of the $600 Oculus Rift price tag Exclusive
What developers, analysts think of the $600 Oculus Rift price tag
January 6, 2016 | By Staff

January 6, 2016 | By Staff
More: VR, Business/Marketing, Exclusive

The newly announced price of the initial Oculus Rift package is several hundred dollars higher than many expected, and many consumers are voicing their displeasure on social media. But what do industry analysts and game developers working with VR think about the price point, and what it means for Oculus, Facebook, and the future of VR game development?

We consulted several analysts and devs to get their take. Please share your reactions in the comments!

What was your initial reaction to the $599 price point for the Rift package?

Feels a little pricey to me. I realize there’s been a lot of R&D spent to bring the commercial version to market, and there’s some price insensitivity among the hardcore VR fan base, but I was expecting perhaps $500 for the basic bundle.--Lewis Ward, IDC's Research Director, Gaming
Lower price than I expected, so it sounds right that they are selling at a loss. Because the Xbox One installed base is over 15 million, they should be able to sell 1 million this year at that price point. The software isn't particularly compelling, but over time, we'll see more software in correlation with growth of the installed base.--Michael Pachter, Managing Director, Equity Research, Wedbush Securities
The initial price point of $599 is at the higher end of expectations, although Facebook/Oculus have hinted in recent months that pricing might not target the mass market. Moreover, since Oculus Rift requires a high-end compatible PC, most consumers would need to spend at least $1,500 (headset + PC) to run at full-strength.--Baird Equity Research
As a game developer, I wish the Rift had come in at a lower price point to help speed up the adoption of VR and recoup our investment faster. As an avid fan of VR, I understand the frustration about the Rift’s price, but I’m not surprised.--Vander Caballero, CEO and creative director of Minority Media, makers of Time Machine VR
That's about what we thought it would be. I think it's crazy that we can play with this technology at all let alone that it costs less than a nice TV!--Colin Northway of Northway Games, creator of Fantastic Contraption VR
The price is a little higher than I expected, and it will be interesting to see what effect it has on sales.--Jesse Schell of Schell Games, makers of I Expect You to Die
It took me by surprise. Palmer Luckey and others at Oculus had been signaling that the price would be higher than originally hoped, but even after that I was expecting $499 and hoping for less.--E McNeill, maker of Darknet
I have personally purchased one and didn’t hesitate (March Batch), great VR is awesome, it’s an incredible price for an amazing headset, it’s just worth it.--John Hibbins of Psytec Games, makers of Windlands and Crystal Rift

Do you think it makes sense not to launch at a lower price point while the VR medium is still at such an early stage?

You want to start high and then go down over time – doing the reverse is very hard by comparison. The price point will erode some demand among first wave buyers but at least they included a controller and a few games in the bundle to lessen the pain.--Lewis Ward
Oculus Rift is priced well above video game consoles (PS4 and Xbox One are in the $300 range). With some Street estimates for Oculus already in the multi-million unit range for 2016, we note these could prove overly optimistic given the $599 headset price point. We note that sales could ramp more quickly if price points are lowered ahead of the next holiday shopping season...One “silver lining” on the high Rift pricing is that Facebook apparently will not be subsidizing Rift as much as we originally feared, limiting any negative impact on gross profit margins.--Baird Equity Research 
The price may mean that high end VR market penetration is a little slower than some originally predicted, but much will depend on where HTC and Sony set their prices. It is worth remembering that the original iPhone was priced at $599, and the Atari 800 was priced at $999, and they both did okay. :) --Jesse Schell
When the first iPhone came out, in 2007, many people complained about the $600 price tag. But they went and waited outside Apple retail stores to buy it anyway. Some people didn’t care about the price; they wanted the new experience. Almost a decade later, iPhone use is widespread and life without it is hard to imagine.--Vander Caballero
I definitely believe that it's still a loss leader, and based on personal experience with early versions, I can say that it's a really fantastic piece of hardware. Still, it's a shame that the price is so high. Part of the original appeal of the Oculus Rift back in the Kickstarter days was that it was finally making VR affordable. They really did well with prices of the dev kits ($300 and $350) and I guess that anchored my expectations for the final product. --E McNeill

How do you think this package stacks up against what the Vive is promising? Do you think that Oculus is competing for the same consumers that Samsung is hoping to attract with the much cheaper Gear VR headset? Or are they pursuing different audiences?

I think Gear is great for introducing a lot of people to VR, but Oculus is far more immersive. There is a place for both.--Michael Pachter
They’re pretty distinct. I consider Gear VR to be a viewer accessory, not a purpose-built VR headset that has a built-in screen. Obviously, Gear VR is also coming from much more of a mobile app orientation while Oculus will basically be a new way to play PC games.--Lewis Ward
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.”--Baird Equity Research 
I think the Rift and the Vive are pretty evenly-matched. Both offer a much higher-quality experience than the Gear VR, so I think they'll be competing for the more hardcore enthusiast market. At $99, the Gear VR is a great introductory option, especially for those who already have a compatible phone, so I think it's possible that Samsung could benefit as the vanguards (the Rift and Vive) boost consumer interest in VR.--E McNeill

Any general thoughts on what this means for the potential of consumer VR for games and entertainment?

I see VR as a supplement to conventional gaming, not as a substitute, but it will drain some wallet share.--MIchael Pachter
I expect U.S. gamers to buy between 1 and 2 million purpose-built VR headsets in 2016. That total spans Oculus, PlayStation VR and HTC Vive sales to gamers next year. That would be a decent start but, as usual, the quality of the associated games is what will primary drive demand – and the games catalog question remains very much up in the air.--Lewis Ward
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. According to Facebook, Oculus Studios will introduce more than 20 VR games that are exclusive to Oculus, with overall more than 100 games and other VR apps scheduled for release this year. We believe this is reflective of the healthy development ecosystem for Oculus, with hundreds of development teams working on the platform. We look forward to more details on the “Facebook for Oculus” app that has generated a lot of buzz in developer circles.--Baird Equity Research 
I think the same will happen with VR: right now, people have a hard time picturing VR as the next universal technology. But years from now, they’ll feel VR was the natural way to go. I’ve been living with VR for the last couple of years. I’ve tried every major VR device, and it has radically changed the way I experience entertainment. After a while with VR, it’s hard to go back to non-VR games because the immersion just isn’t there. I know it’s hard to imagine this now, but VR is here to stay, and more and more people will adopt it in time because the experience is so uniquely powerful. I use the Gear VR in bed all the time, while my wife reads her books next to me. I put on my headset and my mind immediately buys into the world that my eyes are seeing. When I remove the headset, the lights are off, I see my wife sleeping, and it’s like I’ve come back from a trip through time. It’s like lucid dreaming!--Vander Caballero
We knew that the road to popular consumer VR would be long, but it just keeps getting longer. Like a lot of other early VR developers, I'd love to see the VR market finally explode in popularity. Instead, I think I need to get used to slow, steady acceleration at best.--E McNeill
To me, tracked hand controllers is what makes VR truly amazing. Seeing your hands in the world and being able to reach over and grab things like you would in real-life is a totally different experience. That's the experience that made me turn my life over to working in VR. Obviously I really like the Vive for this reason but Oculus is working hard to get their Touch controllers into the hands of the public. When Touch comes out, that's when owning an Oculus is going to be life-changing.--Colin Northway

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