Meta Quest
Goal
Everyone is anticipating some not-so-good news from Meta/Facebook earnings today, and one development canary in the coal mine is a strange move where Meta is raising the price of Quest 2 VR headsets by $100 each. Sorry, sorry, they are “adjusting” the prices.
It’s almost unheard of in the consumer tech space to raise the price of a product so much when you’re not debuting, at the very least, new features or a new model. In the wake of this news, some excuse it with “well, inflation!” and while that may be part of the problem here, the full scope of what’s going on is more complicated.
What seems to have happened here is that in an effort to create a lot of adoption of virtual reality, which Facebook has made the cornerstone of its plans to build and own a significant part of the “metaverse”, the headset has been sold in a cost , or have been losing money. Now, global market conditions, including rising production costs and inflation, have caused them to lose even more money on hardware, to the point where it’s apparently been so painful that they feel the need to add an extra $100 at the price just to stem some of those losses.
And yet, that doesn’t make the move any less absurd, and shows what an almost impossible dream Facebook has with its VR-based metaverse. Despite the same global economic conditions everywhere, you won’t suddenly see the price of an Xbox Series X or PlayStation 5 increase by $100, which would be totally unthinkable. While at launch these consoles may have sold close to cost or at a slight loss to encourage adoption, the way it usually works is that profit margins increase as cheaper to produce these consoles over time. Finally, price cuts follow.
Meta Quest
Goal
Meta just says, “Sorry, your entry ticket just went up 25-30%,” which was already a hard sell, given that VR remains a niche relative to the larger industry and the Quest 2 has strong competition as PSVR 2 arrives.
Facebook bought Oculus more than eight years ago in 2014. And yet, after all that time, we haven’t seen any vision of the virtual reality-based digital society emerge from that purchase, and Facebook’s pivot , including his own name, for chasing the dream of the metaverse has gone relatively nowhere. Of the progress there has been in the virtual reality space, little is credited to Meta or its applications. The best VR social experience is probably the VR chat, where after years Mark Zuckerberg still can’t figure out how to give his Horizon Worlds avatars legs. At this point, the rise of V-Tubers has been a more significant metaverse-type development than anything Meta himself has done.
Obviously, Meta/Facebook is facing serious headwinds on all fronts, including, just yesterday, a heated debate with the head of Instagram about how you don’t really want more videos from people you don’t follow on your feed as Facebook. The social side has done little to innovate and more to copy its competitors over the past few years, especially. But then again, the pursuit of the metaverse is still Mark Zuckerberg’s self-proclaimed goal, and we’ve seen so little performance in this space that this silly price hike is just icing on the cake and speaks to larger hardware issues and general investment for Meta.
Mind you, the earnings will be something else.
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