Meta's (META) VR headsets are getting a major, but perhaps unavoidable, price cut, largely because consumers are, well, just not buying as many as the company expected.
The company today announced that it's slashing prices for its still-new Meta Quest Pro from $1,499.99 to $999.99, while its Meta Quest 2 is dropping from $499.99 to $429.99. For the Meta Quest Pro, which was touted at its launch as being geared towards businesses, that's a roughly 33% drop – and a noteworthy fall from the fanfare with which it was launched in conjunction with support from Microsoft (MSFT) and Accenture (ACN).
Waning consumer interest isn't a Meta-specific problem – the VR market, along with the games industry at-large, saw its 2022 sales drop 2% year-over-year to $1.1 billion, according to research from NDP. But the company's struggled to keep even new headset owners interested in the product. (Meta VP of VR Mark Rabkin recently broke the news to employees, according to a Feb. 28 report by The Verge.)
“Sadly, the newer cohorts that are coming in, the people who bought it this last Christmas, they’re just not as into it, as the ones who bought it early,” he said, per The Verge.
Said IDC Research Director Ramon Llamas: "The market for second-hand and refurbished devices allows consumers to swoop in at a lower price and, if we count the specter of inflation, consumers are smart and they'll find a way to get what they want for less"
He added: "This is part of a macro move, especially because I think it's too early for me to say that they're cleaning out Quest 2 inventory, since the Quest 3 doesn't show up until the end of the year."
High stakes
Meta has sunk a lot into its pursuit of VR. Reality Labs, the company's metaverse operation, has lost billions in the last year alone—it lost a staggering $13.7 billion on Reality Labs in 2022, up from the roughly $10.2 billion it lost on the division in 2021, according to Meta's latest earnings report.
The losses aside, what Meta's spent on VR has given it "a very tight grip on the VR device market," as they grew from holding 45% to 82% of VR market share in the course of this past year, according to Llamas. It's still a nascent market though, and if they want to retain their lead, the play for them right now, he says, is more heads in sets.
"If I'm Mark Zuckerberg, if I want people to come into the Meta family, the easiest way to do that is going to be lowering prices," Llamas told Yahoo Finance. "The more people on board, the better."
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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