The pre-order of Oculus Rift has just started but many people were complaining due to its US$599 price tag which is quite high. Personally, I am not that happy with the price either but I understand the reason behind it. Palmer Luckey, the original founder of Oculus gave us the explanation on Reddit as below.
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.
Now, come to think of it. Oculus was targeting mainstream audience back then with its original concept. But now, the price is not quite acceptable for mainstream audience. Not to mention the recommended PC specs needed to handle VR just fine. Intel Core i5 4590, Nvidia GeForce GTX 970, and AMD Radeon R9 290 is not a mainstream tech at all. The PC with those hardwares usually ended up between $1000 to $1500 (exclude monitor, audio, mouse, and keyboard). For the majority of enthusiast or hardcore PC Gamer, I know some of you might spend more than $599 for the monitor. So, with all of the technology inside the Oculus Rift, I can understand why the price is so damn expensive. Instead of developing half-cooked technology that won’t give you enough satisfactory for the long run, Oculus has decided to built something better than can satisfy their users in the longer run.
It is impossible to make everyone happy, but Oculus will always do what makes VR successful in the long run, at the high end and low end.
— Palmer Luckey (@PalmerLuckey) January 7, 2016