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Facebook’s challenge is simple: Sell more Rifts

The hard task of expanding the market without bundles or price drops

Facebook’s Mark Zuckerberg wearing an Oculus Rift Oculus/Facebook

Facebook and Oculus have a simple, but very difficult, goal: Sell virtual reality to the mainstream. That involves selling many more Rifts to players who may be skeptical of VR as a whole.

The games and hardware shown at Oculus Connect 3 in San Jose last week illustrate the strategy for how they hope to do this heading into 2017, and it involves selling players on — believe it or not — even more hardware.

It’s not going to be easy.

The Touch

We now know that the Touch controllers will be released on Dec. 6 for $199, and that bundle includes a second sensor and a set of two controllers. The games that Oculus showed off at the event that take advantage of the Rift and Touch combination were more than good, they represent a level of polish and sophistication that the Vive’s sprawling but crowded library will have a hard time matching.

Oculus' controllers for 3D movement in VR
The Touch controllers

There’s a reason for that, of course. Many, but not all, of the games that we saw at Oculus Connect were paid for by Oculus. These will be either timed or complete exclusives, and the games that fall under that designation include everything from Superhot to Robo Recall. Oculus is getting so many of the high-quality, soon-to-be finished games because Oculus is funding the creation of those games.

And that’s not a terrible thing, despite the constant braying from the virtual reality subreddits. There aren’t many VR headsets in the market. Developers are likely years away from turning a profit on a truly open market, so Oculus’ ability to fund the creation of polished games is a good thing, even if the ultimate win for the greater community is “only” improved best practices and more skilled developers in the overall ecosystem.

Lone Echo trailer

The Touch launch library is also pretty damned good. We talked about some of it during the event, and we’ll have more stories this week. I walked out of the show absolutely sold on the Touch controllers and the games we were being shown.

But I’m a virtual reality enthusiast; they just had to sell me on content, not the idea as a whole.

That’s where the whole thing falls apart. The Oculus challenge isn’t to sell people like me on the hardware, the company’s challenge is convincing you to pick up an Oculus Rift. If you’re undecided if you want a Rift, Vive or PlayStation VR — or if you don’t know if you want or need a VR headset at all — you’re the most important vote. If they can’t convince you? They’re dead in the water. And that goes for Valve, Facebook and Sony. The challenge for the rest of the year and 2017 is to sell hardware.

And you don’t just need the $600 Rift anymore; you need the $200 Touch controllers as well.

That hardware platform matches the $800 price of the Vive without matching the capabilities. The Vive features room-scale VR and true 360 degree tracking ... and to do that with the Rift you will need to buy an additional $79 camera, for a grand total of three sensing units.

Now you’re up to $880 for the entire platform, although the third sensor isn’t mandatory. There are no planned bundles, nor is there a break in the price if you buy it all together. You can get close to what the Vive offers with only two cameras and some clever positioning, but there’s a reason we saw many demo booths at the show with three cameras positioned around the room.

“I’ll be blunt, just to cut to the chase, I think there are two key paths that are really important,” Nate Mitchell, Oculus’ VP of product, told me. “We haven’t announced any bundles for Touch and Rift or anything like that, let’s totally table that because even if you did that I don’t think the price is going to have a big material impact.”

It’s an interesting, if arguably flawed, way to look at it. It’s not the cost of the Rift hardware that’s holding people back, he’s arguing, but the system that runs it.

“We really look at the PC on Rift as being one of the key barriers to entry,” Mitchell continued. “Last year we were talking about either $899 or $999 ... Oculus-ready PCs. Now we’re talking about $499 min-spec. That’s a huge material difference for people.”

Then there are the games.

“I think the other big thing that’s actually going to move the needle in terms of adoption is just content,” Mitchell told Polygon.

Superhot VR trailer

And Facebook is ready to pay for those games as well. The company announced another $250 million investment in software during the show, on top of the $250 million already invested, as well as a $10 million investment in diversity initiatives. Facebook will also cover Unreal Engine fees for Oculus games through the first $5 million in revenue.

Valve also helps developers out, without requiring any period of exclusivity, but whereas Oculus is funding games directly and waiving Unreal Engine fees, Valve seems to be advancing money from possible future Steam sales.

It’s not quite the same thing, but it does remove the specter of exclusivity.

Will this expand the market?

The real question is whether any of this will lead to more Rifts in the hands of players. Instead of offering a bundle or lowering the price of the base unit, Oculus and Facebook are trying to sell what’s likely a small market even more hardware, which will splint the user base.

You can now spend less on an Oculus-ready PC, but was the cost of the gaming PC the thing holding back investment in the Rift platform?

Robo Recall trailer

The selection of games showed at Oculus Connect 3 was impressive — some of the best VR I’ve ever played in demo form — but I’m an easy sell. A larger market won’t open up until the price of all aspects of the platform, from the controllers to the head-mounted display to the PC itself, comes down.

Developers need to be able to turn a profit even without subsidies and exclusivity deals. That won’t happen until many, many more people own Rifts. Right now there isn’t even a way to buy both the Rift and the Touch controllers as a single bundle. This is even trickier when you consider the Rift is now also competing against the PlayStation VR platform, which offers the head-mounted display, camera and two controllers in a $500 bundle.

The Oculus Rift with the Touch controllers now seems like a more complete platform, but it also raises the price of entry by $200 if you’ve already purchased a gaming PC. Facebook added features, but also effectively raised the price. The path to mainstream acceptance has never felt more winding.