Facebook Slashes Oculus Price For Second Time As World Refuses To Adopt Virtual Reality

In the aftermath of the collapse of the "wearables" craze, Virtual Reality was supposed to be next big thing.

Back in 2014, when Facebook paid $3 billion to acquire Oculus, CEO Mark Zuckerberg said at the time that the medium, which offers a 360-degree panoramic view through headsets, would "become a part of daily life for billions of people."

That has not happened, although as Reuters notes it is unclear if that is because of high prices, something inherent in the technology or some other reason (incidentally, two years ago we suggested that for a fully immersive experience the existing hardware of most computer users would have to be upgraded, a bottleneck which has clearly proven insurmountable for the time being).

Perplexed by the lack of adoption - and hoping the solution is the high cost - Mark Zuckerberg has decided to slash the price of its Oculus Rift VR headset for the second time this year, and for the next six weeks, Facebook’s Oculus VR unit will charge $399 for the Rift, Touch motion controllers and some games. Previously, that bundle cost $598, already $200 discount from their combined launch prices.

The cut matches the price of another virtual reality set, Sony PlayStation's VR, which will likely be cut even further as the industry tries to figure out why the technology for immersive games and stories has not taken off.

According to Facebook's Jason Rubin, head of content at Oculus, the average number of Rift headsets sold each week went up after the first price cut. He said the company is lowering the price again to capitalize on a significant increase in recent months of the number of games and apps for the device. There are more than 700 today, up from roughly 400 in March. “Now is the time to be pushing consumers into the product because they’ll find exciting things to do,” he said.

Of course, now that the deflationary mindset has set in, consumer may simply wait until the next inevitable price cut for a unit that is meant to be a loss-leader.

The price cut comes as Oculus faces mounting competition from HTC Corp. and Sony. Sales of headsets powered by smartphones have far outsold heavier-duty devices such as the Rift. And Oculus also has grappled with internal problems, resulting in the departure of co-founder Palmer Luckey in late March.

While Oculus hasn’t disclosed sales for the Rift, analysts quoted by the WSJ say it continues to trail its rivals by a wide margin. Research firm IDC estimates the device has sold about 520,000 units world-wide to date, compared with 770,000 of HTC’s Vive headsets and 1.6 million PlayStation VR headsets. Facebook said it has provided more than $250 million in funding to developers to drive more content for the Rift. The social-media company said it plans to dole out $250 million more over an undisclosed period. At this point, memories of the ill-fated Google Glass come to mind.

Meanwhile, as the WSJ adds, virtual reality still doesn’t have a breakout hit game or app, though, something analysts say is critical for broadening its appeal. As sales of VR units have faltered, some tech companies have shifted their focus in recent months to VR’s cousin, augmented reality.

For now Facebook is not giving up: at its annual developer conference in April, Chief Executive Mark Zuckerberg said the company would make its augmented-reality tools available to third parties. It is also developing its own augmented-reality glasses.

Whether or not it succeeds, remains to be seen: for most people the non-virtual reality of the real world has been challenging enough. As a result, for now at least VR remains relegated to the punchline section of tech comedies.