In an announcement on the official Oculus blog, Meta said they will be increasing the price of the #1 selling VR Headset, the Meta Quest 2 . When asked why they needed to increase the price during a recession, officials stated that “Zuck needs a new yacht and Facebook is broke af.” OK, maybe they didn’t say that and perhaps we didn’t even reach out to any “officials,” but you have to wonder what could be going through their heads.
The current state of the global economy is in the tank and by all relevant metrics, the U.S. is entering what may be a prolonged recession. Many don’t have enough money to pay their bills and missed payments on auto loans are at an all-time high (even impacting bank’s earnings reports). So what’s the deal with Meta, and why are they raising prices now?
Do they want the Metaverse all to themselves? Do they want to price normies out of their virtual clubs? Or maybe they only want to allow the lizard people in so Mark feels more at home.
Let’s take a deeper look and see if we can make any sense of this recent development.
The Meta Quest 2 - Launching October 2020!
That headline isn’t old, it’s part of the problem. The Meta Quest 2 originally released in October of 2020 and has gone on to become one of the best selling VR headsets of all time and currently stands as the #1 headset on the market. Part of the draw of the Quest 2 is that it comes at a discount to its’ competitors. The Valve Index, the HTC Vive, and the HP Reverb G2 are all quite a bit more expensive, ranging from $500 to $1500 depending on the packages you buy. That made the Meta Quest 2 a steal for most consumers at the entry level price of $299.
Unfortunately, for anyone looking to get into the metaverse in the near future, that price tag just got substantially more expensive. Meta, parent company of Oculus, announced that they will be raising the prices of each version of the Meta Quest 2 by $100, making the entry level 128 gb version $299 and the 256 gb version $399. While a $100 price increase might not seem like a lot, that’s about a 34% increase in price on a device that is almost 2 years old and has no upgraded components of the currently available model.
So what gives?
Well, according to their own announcement , this is what Meta had to say:
The costs to make and ship our products have been on the rise. By adjusting the price of Quest 2, we can continue to grow our investment in groundbreaking research and new product development that pushes the VR industry to new heights.
So at face value, it looks like Meta is blaming inflation and current market conditions for the price increase. The age old “COVID” excuse, right? But I’m not sure that’s actually the case. Computer components tend to decrease in price over time and the Meta Quest 2 is two years old. A company like Meta can also get favorable pricing due to the quantity of orders when they manufacture hardware.
Let’s also take into account that a majority of companies offset hardware costs with software sales. We’ve seen compnaies such as Sony, Nintendo, and Microsoft sell their consoles at a loss in order to provide an entry price for consumers so they can jump into their ecosystem. Over the last three years Meta’s Quest Store has quadruped their revenue. Total sales have passed 1 billion dollars with 30% of that revenue directly going to Meta. So while these software sales aren’t exactly PlayStation and Xbox numbers…they aren’t small by any measure.
So what else might be motivating this price swing? If they want to raise the price, why not release new hardware that is more advanced and warrants the larger price tag? Well let’s look at another statement directly from their announcement that I think sheds a bit more light on the situation:
Even with these pricing changes, Meta Quest 2 continues to be the most affordable VR headset with a comparable feature set on the market.
OK, so let’s unpack that. What they are saying is that even with the $100 price increase, the Meta Quest 2 is still the most affordable headset on the market with comparable features. Which is true. Not only that, but it’s also still one of the best in it’s weight class and for most consumers, is hands down the best choice if you are just getting started in VR or dipping your toes into the Metaverse.
Is Meta The Bad Guy Here?
Let me ask you this: If you were Meta and you had the most affordable VR headset on the market and no direct competitor in your price range, even with the $100 price increase, would you continue to sell at a $100 discount from the market rate? Mark Zuckerbergs answer to that question is, “Hell No!” and I’m not sure I blame him. Despite Meta having truckloads of money, business is business. In this case, they have a corner on the market, no competition and they are seizing an opportunity to increase their margins on a product that is probably not making them a ton of money to begin with.
Are manufacturing costs on the rise after the pandemic? Sure. Have supply chain issues caused all kinds of shortages and probably impacted prices as well? I would imagine they have. Is rampant inflation destroying the value of the dollar and causing prices to rise across the board? Yea, definitely. Even if all of that is true, you still have every right to be mad that the Meta Quest 2 will cost you an extra $100 come August 1st. Cheaper is better, right?
But hey, we’re a capitalist nation, and Zuck needs that new yacht…
So what do you think? Is this bullshit or not a big deal? Do you already own a Meta Quest 2, or were you thinking of buying one? Let us know your thoughts!