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The Cost Of VR Hardware Is Not Going To Hurt The Industry

Kevin VR

Virtual reality is about to become a real thing that normal people can experience. The concept has been around for a long time, decades actually, and bringing it to fruition has been tried on various occasions — but this time, it’s really happening. The technology is available, and the companies working in this space are ready to go. In the coming months we’ll see no less than three premium VR head-mounted displays enter the marketplace and consumers’ homes.

With the imminent release of these devices just around the corner, a lot more people are paying attention, and judging from comments I’ve read from around the Internet, there seems to be a lot of confusion about VR. Be it misguided assumptions about the price of entry, or simply misunderstanding what virtual reality truly means, many people seem to be ill-informed about the subject.Oculus Rift

Late last year, there was plenty of talk about virtual reality, especially after Samsung’s Gear VR hit the market, but the interest appeared to be limited to mostly those who had been exposed to the technology. Most of the comments from people who hadn’t tried VR were naysayers who didn’t (and of whom many still don’t) believe VR will be a success. That seems to have changed now that Oculus has opened pre-orders and has a concrete launch date for the Rift.

On January 6, Oculus launched the pre-order page for its Rift VR HMD, at which point, virtual reality became a real thing for many people. And when Oculus revealed the price, it took a lot of people by surprise. Many people were still holding Oculus to its original plan to release the Rift at price point somewhere between $350 to $400. Palmer Luckey had famously said that Oculus was targeting that price range for the retail release, but that was in the early days, within a year of the Kickstarter campaign that launched the company in the first place. A lot has changed for Oculus since then.

Most notably, Facebook acquired Oculus for $2 billion, giving it the resources to make a better product than Luckey could have ever dreamed of without major funding. It’s easy to have missed the gradual change, but if you’ve been paying close attention to Oculus over the past year or so, the higher price of the retail Rift shouldn’t really be a big surprise. The company has been shying away from the $400 comment for some time now. Oculus never outright said it, but it wasn’t hard to read between the lines: The company was worried about scaring people off with the price before it needed to. In retrospect, that probably wasn’t the best approach, and Luckey even acknowledged as much in a Reddit AMA after the pre-orders opened.

Launching the Rift at $599 USD came as a big shock to many people, some of them flocking to Reddit, forums and various comment sections on their favorite websites, to voice their concerns about the death of VR. To these people, a price point that isn’t within their reach means the tech will never catch on, which really couldn’t be further from the truth.

The pre-order results tell a different story. Oculus sold out of its initial allocation within hours, and has gone on to sell every unit it can produce from now through July. There are countless people ready to shell out that much money to be first in line to have the new technology. It’s the same story any time any new fancy thing comes out. When it hits the market, it launches at a high price, and people still fight to be first in line. VR is no different.

Actually, I take that back. VR is different. Virtual reality is a whole new medium. It’s not an evolution of something that people are familiar with, such as a new game console or a new television technology. These are great examples of technology that people flock to as soon as they are available. People line up and wait long hours to pick up the latest game console, even at several hundred dollars. When 4K and 3D TVs first launched, they were priced in the thousands, not hundreds of dollars. These products have no trouble selling, and generally at very high margins for the companies that are manufacturing them. Oculus on the other hand, launched brand-new technology that has not previously been readily available, and yet people complain about $599 USD ($850 CDN) for the Rift, even when Oculus has repeatedly declared that it has “razor-thin” margins on the hardware. New technology costs money, and usually a lot of it.

The complaints that I’ve been seeing most often revolve around the included “extras” that come in the package. There is good reason for each component included with the Rift package, but if you haven’t ever tried VR, those reasons probably aren’t very apparent. For example, one of the bigger complaints is about the integrated headphones that Oculus included. To anyone working within the VR industry, the importance of good quality audio is paramount. During the Immersed conference in Toronto last September, immersive audio was a recurring theme. Nearly every speaker there agreed that audio is vastly important in VR. Half of the immersion of VR stems from the audio cues, and without a good set of headphones, much of that is lost.

Rather than leave that to chance, Oculus took the stance that everyone should have quality headphones and therefore the company includes a high-quality set with the Rift. Oculus hasn’t gone deep into the details yet, but it has revealed that the Rift includes a high-end audio DAC built right into the unit. This undoubtedly increased the cost of the headset, but the quality of the experience is elevated significantly with great audio. The speakers are removable for anyone who would rather use their own headphones, but it is provided so that you don’t have to buy fancy headphones to truly get the full extent of the experience.

The same thought process is responsible for bundling the Xbox One controller and the Oculus remote. You wouldn’t accept buying a console without a controller to use it with, so I’m rather confused why people believe the Rift should come without one. I think the common misconception is that people don’t think they need an Xbox One controller for VR. That assumption is dead wrong, though. Most experiences in VR do actually require an Xbox controller at this point. More intuitive controls will come along with the Touch controllers, but not every game is suited for that type of control schemed. It’s also not very easy to use a keyboard and mouse with a VR HMD on your face. You can’t see the keyboard when you have the Rift on your head, so controlling games this way is far from an intuitive experience.

With the majority of games coming out in the near future requiring a game pad to operate, Oculus partnered with Microsoft to provide Xbox One game pads with every Rift. The people worried about the price like to think that the addition of the controller raised the price significantly, but that is simply not the case. Xbox One controllers retail for around $60, so at wholesale they would come in much cheaper. The addition of the controller likely adds $30 or less to the overall cost. Not including it would mean that customers that don’t already have a controller would have to shell out more money after buying the headset just to be able to play with it. I’m sure Oculus would face even more criticism if it didn’t include a controller, and those critics would likely be the people who actually have the money to spend on the hardware.HTC Vive

HTC’s Vive includes even more components than the Rift package and it comes with a higher sticker price. The Vive includes the lighthouse sensors needed for roomscale tracking, and two wand controllers that track your hand movement in 3D space. I can’t for the life of me explain why people thought that this setup would somehow be cheaper than the Rift’s $599 asking price. HTC has repeatedly declared that it is working on bringing the most premium VR experience to consumers. I don’t know about you, but I don’t interpret that as a value price. On February 21, when HTC revealed that the Vive would sell for $799 USD ($1149), I was actually surprised, but not for the same reason as many people. I expected the Vive to set you back $999 USD or more. HTC and Valve are being very aggressive with Vive’s price. It offers quite a compelling value at just $200 more than the Rift.

It would appear there are a large number of people willing to shell out for the Vive too. And HTC executive tweeted on the same day that pre-orders opened stating that the company sold 15,000 Vive units in the first ten minutes. I’d say that’s a great start.

High prices won’t hurt the state of VR. There are always people out there with deep pockets that are willing to jump in first. VR will come down in price over time, but in the beginning, it will certainly be a pricey hobby. Many people mistakenly liken VR hardware to a PC peripheral that they expect to be affordable, or to a console generation where they expect plenty of support. They expect that millions of sales are necessary for success, but I don’t think that’s true at all. The more accurate comparison would be the birth of home video games. Hardware was expensive, and there wasn’t a lot to do with it, but what existed was a lot of fun, and more importantly, a brand new experience.

There will always be people with deep pockets to pick up the first generation of new creations. If that’s not you, that’s OK, but it certainly doesn’t mean VR is dead before getting out the gate. VR is just getting off the ground, and it’s not going away any time soon.

Kevin Carbotte is Senior Editor, Hardware for He knows a little about a lot, and a lot about a little. The opinions in his columns are his and his alone, but you are free to have them.

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