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This is a very odd case, if accurate. The Oculus Quest range is a great example of where low-cost (it may be below-cost, I don't know) selling makes perfect, pro-competitive business sense and should be good for the whole market. https://www.cnet.com/news/facebook-said-to-be-target-of-antitrust-investigation-over-handling-of-oculus-vr-division/
VR is not (yet) widely adopted. There aren't many games for it, so few consumers are willing to buy a VR kit, so few developers are willing to make games for it, and so on. It may be an inefficient equilibrium because there's a first-mover disadvantage to gambling on a VR kit.
So along come a few companies who might profit by moving the market to a more efficient equilibrium, with lots of devs and lots of users.
Valve did this on one side by building Half Life: Alyx to be VR-only; Facebook on the other by selling a *really cheap* and decent VR kit.
Valve did this on one side by building Half Life: Alyx to be VR-only; Facebook on the other by selling a *really cheap* and decent VR kit.
Both Valve and Facebook are taking on the risk for consumers, by investing in a game *before* there's a market for it, or by cutting the per-unit profits they make so it's cheaper for users to "gamble" on VR.
This is good for consumers, because it lowers the risks of buying into VR. It benefits developers because it increases the number of VR users they can sell to. And it helps to correct the inefficient equilibrium by reducing the first-mover disadvantage.
This is what platforms do. Uber subsidises rides in new cities to encourage riders and drivers on. Epic's Games Store has been giving away really good games for free for years now, to get users to use it over Steam. Credit cards charge merchants & give customers loyalty points.
It's silly to think that Facebook is selling Oculus Quests to price out other VR headset makers from the market – the market is tiny, it couldn't possibly be worthwhile to do that.
They're trying to *make* a new market, by taking the risk on themselves. That's a good thing!
They're trying to *make* a new market, by taking the risk on themselves. That's a good thing!
(FWIW, I bought an Oculus Quest 2 and thought it was cool, and amazing for the price, but enjoyed the VR experience so much I returned it and treated myself to a Valve Index instead. This is a good example of what I'm describing above in action.)
