Price Isn’t What’s Holding VR Back From Mass Adoption

Price Isn’t What’s Holding VR Back From Mass Adoption

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Palmer Luckey, the founder of Oculus who left the company in 2017, recently published an article with his thoughts on what it will take for VR to reach the mainstream. Price, he argues, matters little if the experience is not keeping people coming back to the technology on a regular basis.

Perhaps not coincidentally, the piece published on Luckey’s personal blog this week comes just after reported priority shuffling at his former company, Oculus. Last week saw the departure of co-founder Brendan Iribe amidst reports that a significant upgrade to the Rift headset was cancelled in favor of a lesser iteration focused on keeping costs down.

Luckey’s piece, titled ‘Free isn’t Cheap Enough‘, argues that the number of headsets sold doesn’t matter if customers aren’t staying engaged with the product and using it on a consistent basis. “Engagement is Everything,” he writes.

“You could give a Rift+PC to every single person in the developed world for free, and the vast majority would cease to use it in a matter of weeks or months,” Luckey writes to illustrate his point. “I know this from seeing the results of large scale real-world market testing, not just my own imagination [his emphasis] – hardcore gamers and technology enthusiasts are entranced by the VR of today, as am I, but stickiness drops off steeply outside of that core demographic. Free is still not cheap enough for most people, because cost is not what holds them back actively or passively.”

The “stickiness” he refers to is whether or not people are staying engaged and making regular use of the product. Engagement on a user-to-user basis doesn’t necessarily increase as cost decreases, he argues. Thus, making cost cutting a top priority doesn’t help in the long run.

Image courtesy HTC / Panora

“Recent market experiments with cheap VR hardware have shown that there are millions of people willing to buy said hardware, but very few among them continue to use the hardware or invest in the software ecosystem for very long. […] Why the lack of use?  Quality of experience. [his emphasis]”

Furthermore, Luckey believes that “No existing or imminent VR hardware is good enough to go truly mainstream, even at a price of $0.00. [his emphasis].”

He does however acknowledge that cutting costs can grow the size of the engaged audience, but “not to nearly the degree many people would expect,” he says. “Price is certainly a relevant factor in the rate of VR adoption, but not a dominant one.”

We reached out to Luckey to understand what obstacles he sees that are standing in the way of engagement, be they hardware, ease of use, content quality, etc.

“Most near-future major hardware advancements will be coming from the big players. The good news there is that most of the big players working on HMDs also run content platforms, so there is built-in incentive to make hardware that drives better engagement, even at the cost of sales or margin.” Luckey tells Road to VR. “On the developer side, people who focus on making engaging content that keeps users coming back despite the current limitations of VR stand to gain the most in the long run – keeping users will only get easier as time goes on and the hardware gets better. Five percent of a one million user market may not seem like a lot, but the network effects are likely to carry forward as the market scales to much larger numbers. This is one of the main reasons I am so bullish on Rec Room, VRChat, etc.”

He says that advancing the hardware and content is key, more important than just cutting costs on the same experience that’s been available for a few years now.

“Higher resolution, improved ergonomics that cater to a wide variety of users, and enough deep content to engage that same wide variety of users are all key factors.”

Luckey founded Oculus back in 2012, which was just a rag tag startup at the time it pitched the Oculus Rift DK1 development kit to Kickstarter. After quickly raising additional investment following the Kickstarter, Oculus was acquired just two years later by Facebook.

While Oculus was left well enough alone for a while, Facebook’s influence on the company has become increasingly apparent. Following a 2016 report which put Luckey’s polarizing political stance in the spotlight, he was shuffled within the company; around the same time Oculus CEO Brendan Iribe stepped down to head the PC VR division. In 2017, Luckey departed Oculus and Facebook entirely, and is presently building a new company, Anduril, which focuses on defense technologies, though he still regularly wades into discussion about the VR industry.

Luckey and Iribe, when both were still at Oculus

After moving to head Oculus’ PC division at the end of 2016, we learned just last week that Iribe himself is departing Oculus amid reports that an overhauled ‘Rift 2′ headset was shelved in favor of a more modest—and perhaps less expensive—’Rift S’ upgrade that’s purportedly due out next year. An anonymous source “close to the matter” told TechCrunch that Iribe wasn’t interested in a “race to the bottom” in terms of hardware and performance, but it seems that the higher-ups disagreed with his approach.

With that context, it seems that Luckey’s piece may be advocating for Iribe’s purported stance of wanting to push the hardware and experience further—with a focus on growing engagement over sales—before focusing on cost cutting.

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