Will the Oculus Quest Make Money?
Facebook announced its new standalone virtual reality product last week.
The Oculus Quest includes everything players will need to get into VR. The product landing page states “No PC. No wires. No limits. Now you can play almost anywhere with just a VR headset and controllers.”
The sales pitch teases a new Vader game as well. We’re here to answer one question:
Will the Oculus Quest be profitable?
Facebook’s Latest Slips
Facebook has come under a fair bit of scrutiny over the last year. The recent compromise of over 50 million user accounts, the ethics of their advertising policies, and the Cambridge Analytica data scandal have all brought the company negative coverage.
On top of that, the company has felt turbulence in the market for the last year. Analysts are concerned about plateauing growth. And the company has struggled to find a way to reliably grow revenue per user as of late.
Facebook isn’t slouching though. It’s cranking out new data centers, announced steps to monetize WhatsApp, building out it’s engineering staff—and of course—trying to break into the VR game.
Unfortunately, virtual reality headset sales have been disappointing, to say the least.
The Vive and the Oculus Rift have also both declined in sales since May. Samsung’s Gear VR sales lifted for a very brief moment before shifting downwards. Industry-wide, something has been off.
Greenlight Digital found in a survey that 38% of people said pricing was the main reason they avoided buying a headset.
Given that the Quest is priced in the same range, it’s hard to be bullish on sales right now.
But, you have to remember: they could use their own ad platform to advertise their latest VR products. And that’s a pretty big advantage.
Regardless of headset sales, Facebook obviously has other revenue to hold them up. They made $40 billion in revenue in 2017—39.9 billion was from ads. They have the resources to keep throwing VR at the dart board until they hit a bulls-eye.