There was no shortage of eye-grabbing virtual reality (VR) developments last week, with HTC, HP, and Pico all either announcing or releasing new headsets. While most VR use cases are still limited to gaming and social media, experimentation with the technology by businesses during the pandemic has opened up a more diverse array of applications.
Notably, the bulk of the newly announced headsets are tailored toward enterprises, reflecting device-makers’ pivot away from the consumer market driven by Facebook’s unbeatable Oculus price point.
Headset-makers’ pivot toward enterprise markets is partly driven by Facebook’s “artificially subsidized” headset prices. According to a 2019 survey of global VR professionals conducted by VR Intelligence, 46% said they saw strong or very strong enterprise growth compared with 24% in consumer markets. Overall, consumers have come to expect lower prices than enterprise customers. In an interview with The Verge, HTC’s VP Dan O’Brien blamed these price expectations on “artificially subsidized price points,” an apparent nod to Facebook’s Oculus Quest 2 ($299). Omdia senior analyst George Jijiashvili echoed this point, noting that many companies are shifting focus to enterprise VR because they can’t compete with Facebook’s loss-leading strategy.
Facebook’s ad revenues can subsidize devices to sell at cost for now, enabling the company to undercut hardware-focused competitors and grow its VR user base in the near term. In a recent interview, CEO Mark Zuckerberg said Facebook wasn’t interested in maximizing profits from Oculus devices, but rather in growing the total number of VR users. Facebook’s prioritization of VR adoption over hardware profits aligns with the company's longer-term ambition to create a VR-based social platform.