FEB. 22, 2016 • A month after the Oculus Rift began pre-orders at $599, HTC Corp.’s Vive entered preorder contention at $799. Similarly, the Rift ships in March with the Vive following in April. The Vive was developed in partnership with Valve Inc. Both virtual reality headsets are more similar than they are dissimilar in specifications and PC system requirements. The major features that the Vive offers for the higher MSRP are 1) more extensive sensor interaction that concentrates more on the room as a whole, not just between the headset and the PC as with the Rift; 2) the Vive includes a front-facing camera, which can bring real world objects into the VR experience to help prevent physical accidents; 3) the Vive’s display has a taller field of view with more visible area than the Rift’s; and 4) Rift owners must use an Xbox One gamepad while Hive purchasers get two full-VR tracking controllers. Similar Oculus Touch controllers won’t be available until later in the year for an additional cost.

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Impact: As the British like to say, “Oi!” Pound for pound the Vive is not significantly more expensive than the Rift when taking into account the cost of VR controllers that Oculus has yet to ship. Eleven years ago Sony Computer Entertainment head Ken Kutaragi tried to justify the PlayStation 3’s $599 MSRP by suggesting consumers would desire one so passionately that they would work more hours to buy one. VR is essentially following the same business model: extremely compelling hardware and user experience drives consumer acquisition over price barriers. The hardware side of VR is definitely of the highest order. The Rift has an outstanding development team, and the Vive benefits from combining one of the more innovative mobile hardware manufacturers with the same people who brought us the Steam distribution service. We have nothing but respect for quality of either headset’s industrial design that will appeal to well-heeled technology early adopters. But with the price of entry nearing $2,500 when the appropriately powerful desktop PC is included, it is hard to see there being enough luxury gamers available for this hardware to support the flood of investors looking to ride the virtual reality train. VR is the new investment buzzword and we doubt that many of them realize that same market forces that felled Kutaragi’s technological achievement out of the gate a decade ago are still very much in force today.

The Oculus Touch controller.

Overall we think that virtual reality’s main appeal will lie beyond the traditional video game audience and be more like the casual consumers that flocked to the Wii and the Xbox Kinect. For that audience, the Rift and Vive will be a hard sell at these price points. That being said the Vive may have an early advantage because it seems to more directly target the core PC gamer that is more likely to have the required hardware specs and will pay a $200 premium so they can say they own the best. However, that is still a very niche audience compared with the overall expectations for these virtual reality systems. So the question is: what level of sales do these platforms expect to consider themselves a success?