Palmer Luckey apologizes for Oculus Rift pricing: ‘I handled the messaging poorly’

Today was a historic day for Facebook-owned Oculus VR as the virtual reality company began accepting preorders for its inaugural headset. Within hours, the first shipment of Oculus Rift devices sold out, with preorders set to be delivered a month or so after the initial March 28 ship date. In an effort to capitalize on the attention the device has received not only in the press but also in the public eye, Oculus founder Palmer Luckey took to Reddit to participate in an Ask Me Anything (AMA) session.

When preorders began, many people were taken aback that the Oculus Rift was priced at $599 compared to the low-end estimate of $350, which Luckey stated at the Oculus Connect developer conference in September. He responded in the AMA by acknowledging that Oculus failed to convey the right expectations:

“I handled the messaging poorly. Earlier last year, we started officially messaging that the Rift+Recommended spec PC would cost roughly $1,500. 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 $1,500!,’ 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, $1,500 is the all-in cost of owning Rift. The biggest portion of their cost is the PC, not the Rift itself.”

Luckey continued to apologize for the miscommunication, saying:

“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 $1,500!’ 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 $1,500, 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 [Development Kit 2] 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.”

This week, Luckey defended not releasing pricing information, saying that not doing so was “standard practice.” When asked in the AMA about providing advanced notice, he said that it wouldn’t make sense to give just the pricing without providing users with all the detailed information:

“Price and preorders usually go hand in hand, and there is usually not an advance announcement of preorders. In this case, people were begging us to give them some advance notice of when they would go live — that is why we decided it would be a good idea to announce preorders ahead of time. It did not make sense to announce price in a vacuum without all the other info.”

Later in the AMA, Luckey continued to respond to more questions about the pricing, attempting to stress that he hears the concerns of his potential customers but explaining that the realities of making the Oculus Rift cheaper wasn’t necessarily achieveable:

“The unfortunate reality we discovered is that making a VR product good enough to deliver presence and eliminate discomfort was not really feasible at the lower prices of earlier dev kits that used mostly off-the-shelf hardware.

We could have released a lower quality product and saved one or two hundred bucks, but the all-in cost for the average consumer (including PC) would not have budged significantly. To address a later post, mums and dads would be paying in the $1,300 to $1,500 range regardless.

DK1 and DK2 cost a lot less — they used mostly off-the-shelf components. They also had significantly fewer features (back-of-head tracking, headphones, mic, removal facial interfaces, etc.) For Rift, we’re using largely custom VR technology (eg. custom displays designed for VR) to push the experience well beyond DK2 to the Crescent Bay level.”

Sure, if the second version of the Developer Kit was good and cheaper than the consumer one, why not use that? It’s not as simple as that and wouldn’t be good for the consumer VR industry, Luckey stated, not to mention it would be more expensive in the long-term:

“Shipping a real consumer product is more complex than janking out a dev kit, even something nearly identical to DK2 would have ended up costing $400+, and the all-in investment including a PC would still be around $1,300, not enough to make the jump from enthusiast to mainstream.”

Luckey doesn’t anticipate seeing a cheaper, stripped-down version of Oculus Rift, at least in the first generation: “A standardized system is in the best interest [of] developers trying to reach the widest audience, and we cannot significantly reduce the cost without dramatically reducing quality,” he said.

However, in order to make the product more affordable to the average person, Luckey said that steps Oculus could take include working with graphics card and computer manufacturers on optimizing for VR, which should reduce hardware costs. “For the average person, the PC is by far the biggest cost, not the headset. The end goal is to make sure people can use the PC they already have in most cases,” he said.

Citing a lesson learned, Luckey promises to no longer provide “ballparks” for answers, saying that from now on, he’ll work to better hold himself to his motto of trying to underpromise and overdeliver.

Moving on, Oculus plans to have a huge number of games available for the Rift headset by the end of 2016, with an estimate of at least 100, including more than 20 from Oculus Studios. The company will also be putting more effort into Oculus Research that’ll create new features to go into the next generation: “VR is still advancing very rapidly; there will be some pretty huge technological shifts happening,” he said.

For developers eager to build apps for the Oculus Rift, Luckey indicated that the 1.0 Rift SDK will be made available at launch. Those that have the Oculus developer kits will be happy to know that even though the public version (CV1) will be out, the company will continue to support DK1 and DK2 and will be sharing compatibility information “over the next few months.”

And while early preorders have sold out — analysts have predicted that the company should sell 1 million units this year — there is some hope for those who want to try their luck at retail stores. Oculus will be allocating a “limited number of Rifts to select U.S. retail locations” for April, according to the AMA. How many exactly remains unknown. Unfortunately, there aren’t plans to bring the device to international customers.

Luckey declined to disclose how many Oculus Rifts have been preordered, blaming it on “financial disclosure regs and stuff.”