Facebook's Oculus Cuts Virtual Reality Headset Price to Spur Sales

(Bloomberg) -- Facebook Inc.'s Oculus division is looking to get virtual-reality headsets into more homes by way of a significant price drop. 

The social-media company cut the price of its flagship Oculus Rift headset to $499 from $599. It also lowered the price of the Oculus Touch system, a pair of motion-sensing controllers, to $99 from $199. 

Facebook bought Oculus for $2 billion in 2014 as part of Chief Executive Officer Mark Zuckerberg's plan to use virtual reality to offer richer ways of communicating online. So far, high prices for the hardware have limited adoption to mostly video-game players. Just over 350,000 units were sold in 2016, according to SuperData Research estimates. That's less than rival products from HTC Corp. and Sony Corp. It's also a long way from Zuckerberg's late 2014 goal of 50 million to 100 million units over about a decade, and the more than 1 billion people using Facebook's free social network.

"We know that price is definitely one of the concerns," Nate Mitchell, Oculus's head of product, said, while noting improvements in manufacturing and falling component prices let the company pass savings onto consumers.

Like some other VR devices, the Rift still requires a Windows PC with a powerful graphics processing system. Compatible computers range from about $500 to more than $3,000. Sony's VR headset, which costs $399, requires a connection to a $350 PlayStation 4 gaming console, while the PC-tied HTC Vive costs $799. Alphabet Inc.'s Google and Samsung Electronics Co. offer sub-$100 headsets with less-advanced graphics performance that work with smartphones. 

Former chief engineer and co-founder of Oculus VR Jack McCauley said Facebook's VR headset is still too expensive, even for gamers. "When you get above $300, it's really hard to move product in the gaming world," he said.

Eventually, there will be an Oculus system that doesn't require a separate PC purchase, reducing the cost further.

"We see a future where there will be standalone VR devices out there, it's definitely in our long-term vision of ubiquitous VR," Mitchell said. Oculus showed off a prototype of such a wireless headset in October, but it gave no concrete release date for such a device. 

The Oculus Rift system is not currently compatible with Apple Inc.'s Mac computers, and while Oculus does not have an active team working on this, Mitchell wants Mac support in the long-term.

To contact the author of this story: Mark Gurman in San Francisco at mgurman1@bloomberg.net.

To contact the editor responsible for this story: Alistair Barr at abarr18@bloomberg.net.