Palmer Luckey on Rift Pricing Reaction: ‘I Handled the Messaging Poorly’

by UploadVR • January 6th, 2016

Palmer Luckey answered questions on Reddit in conjunction with the launch of the consumer Rift, owning a mistake in his efforts to evangelize the Rift while simultaneously giving the impression the price would be lower than it ended up being.

Follow Palmer’s answers here.

I handled the messaging poorly. Earlier last year, we started officially messaging that the Rift+Recommended spec PC would cost roughly $1500. That was around the time we committed to the path of prioritizing quality over cost, trying to make the best VR headset possible with current technology. Many outlets picked the story up as “Rift will cost $1500!”, which was honestly a good thing – the vast majority of consumers (and even gamers!) don’t have a PC anywhere close to the rec. spec, and many people were confused enough to think the Rift was a standalone device. For that vast majority of people, $1500 is the all-in cost of owning Rift. The biggest portion of their cost is the PC, not the Rift itself.

For gamers that already have high end GPUs, the equation is obviously different. In a September interview, during the Oculus Connect developer conference, I made the infamous “roughly in that $350 ballpark, but it will cost more than that” quote. As an explanation, not an excuse: during that time, many outlets were repeating the “Rift is $1500!” line, and I was frustrated by how many people thought that was the price of the headset itself. My answer was ill-prepared, and mentally, I was contrasting $349 with $1500, not our internal estimate that hovered close to $599 – that is why I said it was in roughly the same ballpark. Later on, I tried to get across that the Rift would cost more than many expected, in the past two weeks particularly. There are a lot of reasons we did not do a better job of prepping people who already have high end GPUs, legal, financial, competitive, and otherwise, but to be perfectly honest, our biggest failing was assuming we had been clear enough about setting expectations. Another problem is that people looked at the much less advanced technology in DK2 for $350 and assumed the consumer Rift would cost a similar amount, an assumption that myself (and Oculus) did not do a good job of fixing. I apologize.

To be perfectly clear, we don’t make money on the Rift. The Xbox controller costs us almost nothing to bundle, and people can easily resell it for profit. A lot of people wish we would sell a bundle without “useless extras” like high-end audio, a carrying case, the bundled games, etc, but those just don’t significantly impact the cost. The core technology in the Rift is the main driver – two built-for-VR OLED displays with very high refresh rate and pixel density, a very precise tracking system, mechanical adjustment systems that must be lightweight, durable, and precise, and cutting-edge optics that are more complex to manufacture than many high end DSLR lenses. It is expensive, but for the $599 you spend, you get a lot more than spending $599 on pretty much any other consumer electronics devices – phones that cost $599 cost a fraction of that to make, same with mid-range TVs that cost $599. There are a lot of mainstream devices in that price-range, so as you have said, our failing was in communication, not just price.

Further addressing price, Luckey responded to one Reddit user who asked why the “ballpark” figure of $350 was almost doubled for this official announcement.

“The unfortunate reality we discovered is that making a VR product good enough to deliver presence and eliminate discomfort was not really feasible at the lower prices of earlier dev kits that used mostly off the shelf hardware. We could have released a lower quality product and saved one or two hundred bucks, but the all-in cost for the average consumer (including PC) would not have budged significantly. To address a later post, mums and dads would be paying in the $1,300 to $1,500 range regardless,” Luckey wrote.

Luckey has also been quoted as saying that something priced as high as $600 is so prohibitively expensive that it “might as well not exist.”

When asked if he thinks differently now, Luckey’s response was to say that, “The landscape has changed a lot. We are not the only player, and the Rift is not the only headset. GearVR is $99, Rift is $599, and other players are going to be entering at various price ranges on both console and PC. I want to do what Oculus can uniquely do.”

Palmer also nixed the notion of there being a more streamlined retail release (without the Xbox controller, Oculus Remote, headphones etc.) stating that it would only make for a fractionally cheaper product.  When asked if he could explain the production costs that added up to the $600 price point, he dodged the question.

“And spoil the first tear down?! I wish I could share the detailed breakdown, but I cannot, for both internal and partner related reasons. I will use whatever credibility I have left to assure you that you are getting a pretty crazy deal.”

With the price question answered to the reasonable satisfaction of the masses, the crowd moved on to other inquiries such as longevity.

“Somewhere between a console and a mobile phone, much closer to a mobile phone,” Luckey replied when asked what the lifespan of this first generation Rift would look like. “The PC specs for Rift won’t change during the 1st generation,” he added.

On the developer side, Luckey confirmed that the 1.0 Rift SDK will be made available to all developers at launch, and said the company is working on a proprietary store platform that should be up and running by launch as well.

Toward the end of the session Luckey was prompted to address the rival headsets that have been created since he launched his company, such as the HTC Vive and PlayStation VR.

“We have been working on VR for a long time. A lot of these players did not even come into the game until long after we were well along on our current path – when Vive was first announced, for example, we had already shown our Crescent Bay prototypes six months prior, and showed the final Rift just a couple months later. Our strategy cannot change at the last second just because competition shows up and ships after we do.Same goes for future research – we are researching nobody else is, and have by far the largest VR team in the world to do so. We will continue doing things that we are uniquely positioned to do.”

Luckey also said in a later post that, “I think the Rift is the best headset with the best content and the best long-term support.”

Finally, in what might be the most important announcement of the night, Luckey announced that the tether cord that ships with the Rift will be a comfortable four meters long.

Luckey has said he may continue the AMA later tonight. Any new updates will be added to this story.