Prospects get complicated for Meta’s virtual reality dreams – TechCrunch

For an industry that rarely has more big news, this was a terribly big week for VR. Unsurprisingly, all of the important data points relate to the only benefactor in the industry these days, Meta, which successfully raised the cost of entry to its VR ecosystem, finds itself in yet another battle with the US government. on VR, and announces that it had, once again, burned a huge amount of money on its Reality Lab efforts this quarter.

Perhaps the weirdest news was Meta’s seemingly unprecedented decision to raise the prices of the Quest 2 by $100. This is, again, a year-old headset that Meta allegedly sold at a loss in order to attract more consumers to the market. This steep increase bumps the entry price from $299 to $399 and signals that the company’s willingness to subsidize headphones has its limits.

This price increase is accompanied by record levels of inflation and a hostile stock market which has given a particularly strong hatchet to Meta’s share price. The company’s shares are now trading below where they were 5 years ago and Reality Labs’ expenses have become a more relevant concern for investors as the company’s revenue growth begins to fade .

Virtual reality and the metaverse are becoming very expensive endeavors for Meta. The company announced Wednesday that it spent $2.8 billion on Reality Labs in the second quarter alone, a figure showing that the company’s metaverse dreams are more than just hokey marketing talk and remain a gamble. substantial financial backing with little short-term upside in an arena where many of the big tech giants have appeared to cut R&D spending in recent years.

What’s worth remembering is why Meta pursued the strategy of selling headsets at cost to begin with. This wasn’t the company’s original plan, the Rift headset and its controllers cost nearly $800 when they launched and it wasn’t until years of falling prices that the company was able to increase the device sales. It was, of course, hardware that required a gaming PC and was among close competitors at similar price points.

Fast forward 5 years and there may still be a handful of headsets on the market, but the cornerstone of headset growth recently seems to be tied exclusively to the Quest 2, which is the least common entry point. expensive in the market. The increase in price of the technological hardware product in the middle of its life cycle certainly suggests a fundamental miscalculation and a mistake that the company is less likely to repeat.

As the company heads towards the release of its “Project Cambria” headset which Bloomberg says will be called the Quest Pro and which rumors have pegged a price tag of $1500, the VR industry appears to be compelled to compete on the relative merits of its ecosystem and justify something closer to the true cost of its hardware to consumers. This would be a big and sudden shift for Meta and I wonder how big the user audience is for a $1500 headset in 2022, even with a “professional” orientation.

Meta’s endeavors don’t take place entirely in solitude. Sony announced new details on its second-generation headset this week, and Apple has invested heavily in a long-delayed mixed reality headset release, a device that could cost upwards of $3,000 upon final release and will serve no purpose. doubt outlier in its “Pro” product suite.

However, Apple seems poised to get an edge when it comes to acquiring new startups and products in the VR space. Meta’s efforts to spend big to win big in the Metaverse met a rather concerning challenge on Wednesday when the FTC announced it was suing to block Meta’s purchase of VR developer Within, the studio behind the VR fitness app Supernatural. A block of the deal, which would have cost more than $400 million, would be a pretty stunning rebuke of one of the VR industry’s only exit opportunities, at a stage in the industry where revenue are hard to find and virtual reality startups fail to gain much interest from investors.

After much of the decade since Facebook acquired Oculus, the VR industry is still so dependent on Meta’s checkbook. A downturn in the public market forces the company to adjust the company’s infinite spending in the subcategory and it’s clear that there will be plenty of second-order effects along the way.

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