Oculus Rift is a virtual reality headset developed and manufactured by Oculus VR, a subsidiary of Facebook (NASDAQ: FB). It was released to the public on March 28, 2016.
In 2012, before Facebook purchased Oculus for $2 billion, Oculus created a Kickstarter campaign to fund its VR headset development. The campaign was very successful and earned $2.5 million to fund the VR project.
There’s always been interest in virtual reality. It’s slowly but gradually become a market with a lot of potential — and it’s looking for a leader.
You can see this interest if you take a look at the companies that have invested or are starting to invest. Companies like HTC and Sony’s (NYSE: SNE) PlayStation have invested in VR technology and its development; both companies have their own virtual reality headsets that are available to the public.
Oculus Rift is Gaining Traction in a Growing Market
Oculus took an interesting route over this summer to gain a good chunk of the market share…
Oculus Rift cut its pricing this summer for a six-week period, and that price cut could be a huge factor in why it’s been quickly gaining market share from HTC…
Facebook’s head of content and marketing for Oculus VR said, “According to Valve’s latest Steam survey data, Oculus has increased its market share by 8.1% — which has been the biggest increase in the span of one month.”
Oculus Rift currently stands at 43.8% of the market share, while its main competitor, the HTC Vive, has 52.3% share. This proves Oculus is catching up to its competitor, and the temporarily reduced price of Oculus Rift has played a huge role in taking HTC’s market share.
The price for the Oculus Rift headset dropped to $399 for the full VR kit compared to its original price of $799.
Usually video game consoles don’t start seeing a 50% reduction in price until three to four years after they’ve been on the market.
The price reduction of $399 has ended, but Oculus has decided it will continue to sell the bundle at a reduced cost of $499, since that price tag has been successful at capturing consumers who otherwise would have never bought the headset.
It’s Only Just Begun for Virtual Reality
According to a 2017 report from the International Data Corporation (IDC), worldwide revenues for the augmented and virtual reality market will reach $13.9 billion in 2017 — a big jump from 2016’s revenue for VR, which came in at $407 million.
Additionally, IDC forecast that the consumer market will be the largest AR/VR segment throughout the period, with worldwide spending on hardware, software, and services expected to reach $6.2 billion in 2017, an increase of 130.5% from 2016.
There most likely won’t be an Oculus Rift 2.0 for the next couple of years. The adoption of virtual reality has been a little slow, and that’s only because the technology, hardware, and games available on the systems don’t entirely match the high price tag attached to the systems.
In February, Mark Zuckerberg, CEO of Oculus parent Facebook, said the company’s efforts towards VR are “not going to be profitable for quite a while.” And that’s okay because right now is the prime time to introduce the world to the technology and its capabilities, giving developers time to create games and figure out ways to improve both the technology and the hardware.
It will also give Facebook some time to figure out how it wants to integrate virtual reality technology into its massive social media platform.
Virtual reality has the potential to become a huge market; companies just need to perfect the technology before trying to push it on consumers.
Until next time,
Jennifer Clark
Pro Trader Today