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Virtual Reality, Real Prices: An Unofficial Review of the VR Landscape

By Steve Bass
May 24, 2016

Sony PSVR – $400     

Oculus Rift – $600     

HTC Vive – $800

Fascinating.

If you are at all interested in pricing, there is almost no greater event than the release of a new technology. In the initial pricing of that technology, there is a fine balance between recouping potentially massive development and manufacturing costs, aligning price with value, and keeping the price in a range that allows for significant adoption or the tech will fizzle out.

One of those events is unfolding at this very moment – 2016 is the year of Virtual Reality (VR)! And instead of just one Virtual Reality system, we’re getting three.

For decades, VR has been somewhat of a pipe dream, existing at the fringe edge of technology, but always with issues preventing commercial adoption.

Untitled

Old school VR

At the same time, pop culture has bombarded us with movies, books, and video games that drive a vision of the future and a thirst for VR that is, well, real.

Thanks to the Oculus Rift, a Kickstarter monster eventually acquired by Facebook, Virtual Reality transformed from fringe to mainstream and went live on March 28, 2016. The Vive (by HTC/Valve) followed not far behind on April 5, and the PlayStation VR (PSVR) is releasing in the fall. (To be fair, several lower-end systems have been released over the last few years, but nothing that approaches the level of these three systems, which are so advanced that actual reality and virtual reality are now becoming blurred.)

Arnold tries early VR tech in Total Recall

Arnold tries early VR tech in Total Recall

Reviews of released systems are extremely positive, and the number of supported games and apps at release is surprisingly large. But the real question is – why such a large price discrepancy? Is the Vive really twice as awesome as the PSVR? Or is Sony showing a good understanding of its core consumer – someone who is more price conscious than those willing to pay much larger amounts for a high-end gaming PC?

To answer these questions it is worth considering a differentiating factor for each (This is not meant to be a comprehensive review; I’m not looking at display resolution, sound fidelity, controller quality, etc.):

1) The Vive supports large scale movement (up to 225 square feet), whereas the Oculus and PSVR are a mostly stationary experience. There is a significant edge to a VR experience that actually has you walking around as you play, but this also requires the most significant hardware investment. Both of these factors probably play a part in the large price tag; presumably they’ve also considered the inconvenience of setting up the extra hardware and requiring a large dedicated playing area.

Vive wins the price per square foot battle.

Vive wins the price per square foot battle.

2) The Oculus Rift has a massive brand, the value of which cannot be overstated. In some ways the Oculus Rift is even viewed as synonymous with Virtual Reality itself, in the same way Kleenex is with tissues, or Google with search engines. It’s interesting (and valuable) that one VR platform was able to gain such a large mind-share by time of launch for these platforms. Any value there? My 14 year-old daughter recently told me we needed to buy an Oculus Rift. When I asked why the Rift versus the Vive or PSVR, she had no clue that there were any other options. Mind-share = wallet-share in action!

This user is immersed in his Oculus… (or catching a few winks)

This user is immersed in his Oculus… (or catching a few winks)

3) The prime differentiator for the PSVR is its simplicity in terms of plug-and-play with the PS4, versus the Rift and Vive which require high-end configured PCs. This isn’t necessarily a huge advantage, which is probably a significant factor in the PSVR’s lower price. Sony has a large install base (35-40M users), and most of those users – barring a significant technology gap – will lean towards picking up a PSVR over the others. The key is simply not to price the PSVR out of the price range of its users; the $400 price tag (roughly the same as the PS4 itself), while much lower than the other systems, has still received some grumbles from its base.

Is that an X-Man? Nope – just a PSVR user

Is that an X-Man? Nope – just a PSVR user

Only time will tell which of these will be the winner. Will it be the feature-heavy system, the well-recognized brand, or the low price play? Will there be more than one success story thanks to a segmented customer base? Will Virtual Reality be more than a passing fad, or will prices come down to help make sure that doesn’t happen? Are these prices too high for mainstream adoption in the first place? So many questions, so few answers!

Fascinating.

  • HTC , Oculus , Playstation , price , profit , PSVR , Virtual Reality , Vive , VR

    Steve Bass

    Steve has been involved in pricing since 2007, after spending many years in molecular biology and telecommunications R&D. Within pricing, he has worked in deal management, strategic pricing, tool development, and product implementation across multiple industries. Behind all of his pricing experience is a love of data and a desire to help others succeed.