Analysts on Oculus’ rumoured $200 VR headset: ‘smart’ or a ‘loss leader’?

Hot off the heels of Oculus’ temporary price cut to its Rift headset last week, a report surfaced on Friday that the company might also be preparing an even cheaper model of the Riftas a kind of budget successor.

Currently code-named ‘Pacific’, the headset will allegedly bridge the gap between mobile-based virtual reality and higher-end headsets like the Rift. It will also be wireless, according to the report, and operate as a standalone device without the need for additional hardware, such as a PC or phone – much like HTC’s new rumoured standalone headset.

Analysts, however, are undecided on whether it will turn Oculus’ fortunes around, whose Rift headset has been struggling to match the shipping numbers of both the HTC Vive and Sony’s PlayStation VR.

"Oculus is losing the high-end PC race to HTC Vive, but the company has seen the massive potential from Gear VR’s strong market lead,"Stephanie Llamas, vice president of research and strategy at SuperData Research told MCV.

"Facebook is not a company for the niche consumer – their selling point is how accessible their services are to anyone, anywhere. So finding something with the potential for mass penetration is a priority, especially with Rift’s bumpy past.

"However, an untethered, self-contained device for $200 seems like either a loss-leader or a highly simplified VR experience (for instance, Google and HTC’s new Daydream device will boast the same conveniences for a much higher price). Pacific may be a combination of both so that Facebook can finally have a long-term stake in the mass consumer market, but it’s too soon to tell."

Karol Severin from MIDiA Research, however, is more optimistic, saying that Oculus’ temporary price drop for Rift "is a testament to the crucial need of narrowing this gap to bring VR to the mainsteam." However, while Llamas said the price drop shows "a lack of confidence" from Oculus, Severin argues the company was right to make it temporary.

"Instead of devaluing its own product, it’s smart for Facebook to introduce a mid-range device, with the hope of maintaining higher price points of top tier VR devices in the future, when more and better content becomes available for them.

"More justifiable price points and an increasing volume of content (not only in terms of the number of titles, but also in terms of the genre and entertainment format scope) will make VR more appealing to the masses over time."

That said, even Severin notes that it will take more than price drops and new hardware to truly take VR into the mainstream:

"However, VR devices will not sell because of their tech specs or price points alone," he says. "They will only start appealing to the mainstream, when/if their games catalogues of what users are able to enjoy start matching consumer expectations more closely. And, great games take time to produce. While discounting the existing, and producing new cheaper devices will play a role, entertainment VR will not pick up meaningful traction until there is a compelling content mix in place. Give it three to four more years."

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