When the first consumer-grade virtual reality headsets came out in the first half of 2016, there were plenty of mutterings about the cost of a premium virtual reality set-up. At the time, an HTC Vive or and Oculus Rift, along with the necessary computer hardware to run VR, ran to a figure in the region of £3K to £3.5K. Since then, graphics cards have become immeasurably better and the cost of VR-ready PCs have plummeted.  

In the last couple of months, however, the headsets themselves have also come down in price. First Oculus announced a summer deal where its headset was reduced to £399 (although this is due to rise again soon to £499), then HTC reducing its price down to £599. Most recently, Sony cutting the price on its PSVR headset, although only in the US and Canada for now.

On one hand, cheaper hardware is always a win for customers, particularly when most premium headsets were out of the average person’s price range to begin with. However, perhaps the arrival of lower prices is recognition from manufacturers that the hype around virtual reality hasn’t quite matched up with the actual demand from personal and professional users for this technology.

 

#1 – Have sales of VR headsets been less than we all expected?

When it comes to VR headsets, for most manufacturers sales still only measure in the hundreds of thousands. The market looks likely to fall a long way short of VR units sales in the tens of millions like some analysts had predicted for 2017. This has put pressure on the big boys, with Mark Zuckerberg among those admitting that VR is not yet meeting the inflated expectations of many investors:

“I would ask for the patience of the investor community […] because we’re going to invest a lot in this, and it’s not going to return or be really profitable for us for quite a while.”

So far, mobile-based headsets are far and away outstripping their more cumbersome, PC-based rivals in terms of units shipped. By far the most popular headset to date (not including the Google Cardboard) is the Oculus-made Samsung Gear VR, with more than double the number of sales of the most popular wired competitor, the Sony PSVR.

Obviously, cost is a large factor in this: one example being that at £69, Google’s Daydream headset is only a fraction of the price of the HTC Vive, even after the latter's recent price reduction. For the many consumers and professionals still dipping their toes into the possibilities of virtual reality, this is a much more affordable investment that shelling out for high end PC hardware and an expensive headset to match, despite the clear improvement in the overall experience that this can bring.

#2 – Are VR headsets reaching economies of scale?

Although sales might not be what was predicted in some corners, the numbers being sold by the likes of HTC and Oculus are increasing and, as more devices are built and shipped to customers, manufacturers will almost certainly start to find greater economies of scale in their production and distribution costs.

While their shipping numbers aren’t huge, it’s certainly likely that HTC, Sony and Oculus now spend less to manufacture each unit they sell than they needed to originally. In order to start gaining mass market traction, therefore, it makes sense for these companies pass these savings on and make it more affordable for businesses and consumers alike to get behind. They won’t ever be able to compete with their cheaper rivals on price but, particularly for professional users, the reduced cost might seem more viable when weighed against the vast improvements in image quality that premium VR headsets can offer.

#3 – Are high-end manufacturers preparing for the next generation of VR headsets? 

While it’s been known for a long time that Oculus is working on at least one wireless headset, although we’re still waiting for further details and a better idea of when it (or they) will be made available for purchase. We might hear more about these 2nd generation VR headsets at this year’s Oculus Connect 4 but, for now, we’re still in the dark as to exactly what is on the way, and when it will arrive.

About HTC’s rumoured 2nd gen model –  supposedly called Oasis – we know even less right now. Opinions are mixed as to a likely release timeframe, with suggestions ranging from a matter of months to a games console-like cycle of 6-8 years. Also mooted is a modular approach to VR upgrades, in the manner of PC updates, which would mean that components could be removed and replaced as better alternatives become available.

One of the main reasons why the PSVR has performed more strongly among gamers is that it relies on the PS4 console family, which many people already have in their homes. An anticipated link-up between Oculus and Microsoft’s Xbox has so far failed to materialise, despite the new One X console having the processing power to handle VR. With the PS4 Pro only recently launched, it's likely Sony will look to consolidate (rather than renew) its VR offering over the coming months.

Regardless of when the next generation of VR headsets break cover (quite possibly by the end of 2018?), the overall cost will be heavily influenced by something that neither company has control over: the price of a VR-compatible PC. While graphics cards have come on in leaps and bounds over the past twelve months, buying a high-end PC to run VR on is still a reasonable additional investment. If that kind of processing power becomes common-place in PCs and laptops, however, then it would bring down the net-cost of a premium VR headset down hugely. It’s not going to happen overnight, however.

A welcome price drop for virtual reality, or something to worry about?

For now, there is no sign that VR is going away any time soon, regardless of less-than-encouraging sales. The market is undergoing a correction and seems to be in the process of going from a premium experience to something that is an affordable option for a much wider audience. Lower prices are a necessary part of this and – if it makes high-end VR experiences accessible to more people and businesses – then that surely cannot be a bad thing.

Global VR Sales Q1 2017-01

HTC Vive VR headsets Andrew Lucas Studios v2

Oculus Rift VR headsets Andrew Lucas Studios

PlayStation PSVR VR headsets Andrew Lucas Studios

oculus rift standalone Andrew Lucas Studios