The Absurd Quest VR Price Hike Emphasizes Meta’s Untenable Metaverse Dreams

Everyone is anticipating some not-great news out of Meta/Facebook’s earnings today, and one canary in the coal mine development is a bizarre move where Meta is actually raising the price of Quest 2 VR headsets by $100 each. Sorry, sorry, they’re “adjusting” the prices.

It is nearly unheard of in the consumer tech space to hike a price of a product by that much when you’re not debuting at the very least, new features or a new model. In the wake of this news, some are excusing this with “well, inflation!” And while that may be part of the issue here, the full scope of what’s going on is more complicated.

What appears to have happened here is that in an effort to create a lot of VR adoption, which Facebook has made the cornerstone of its plans to build and own a significant chunk of the “metaverse,” the headsets have been getting sold either at cost , or have been losing money. Now, global market conditions, including rising production costs and inflation, have made them lose even more money on the hardware, to the point where it’s apparently such a pain point they feel the need to tack on an extra $100 to the price just to stem some of those losses.

And yet, that doesn’t make the move any less absurd, and shows what a nearly impossible dream Facebook has with its VR-based metaverse. Despite the same global economic conditions everywhere, you’re not suddenly going to see the price of an Xbox Series X or PlayStation 5 be raised by $100, which would be totally unthinkable. While right at launch, those consoles may have been getting sold close to cost or at a slight loss to encourage adoption, the way this usually works is that profit margins increase as it gets cheaper to produce these consoles over time. Price cuts eventually follow.

Meta is just straight up saying, “sorry, your ticket to entry just went up 25-30%,” which was already a tough sell, given that VR remains a relative niche in the larger industry, and the Quest 2 has steep competition like PSVR 2 coming up.

Facebook bought Oculus over eight years ago in 2014. And yet, after all this time, we have not seen any grand, VR-based vision of digital society emerges in the wake of that purchase, and Facebook’s pivot, including its own name, to chasing after the dream of the metaverse has gone relatively nowhere. What progress there has been in the VR space, little of it is credited to Meta or its apps. The best VR social experience is probably still VR Chat, where after years, Mark Zuckerberg still can’t figure out how to give his Horizon Worlds avatars legs. At this point, the rise of V-Tubers have been a more meaningful metaverse-type development than anything Meta itself has done.

Meta/Facebook is obviously facing serious headwinds on all fronts, including, in the same day yesterday, a lively debate involving the head of Instagram about how no really, you guys want more videos from people you don’t follow into your feed as Facebook’s social side has done little to innovate and more to copy its competitors the past few years especially. But again, the pursuit of the metaverse remains Mark Zuckerberg’s self-proclaimed goal, and we have seen just such little meaningful yield in that space that this goofy price hike is just icing on the cake, and speaks to larger hardware and overall investment problems for Meta.

Buckle up earnings, are going to be something else.

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