Mark Zuckerberg Drops Huge Hint on Oculus Quest Install Base on Facebook Earnings Call

Many VR enthusiasts are skeptical about SuperData's VR sales reports, the most recent of which pinned the install base of Oculus Quest to now be 705,000+. But there's another, possibly more reliable source for estimating the Quest's install base: What Facebook CEO Mark Zuckerberg says about Quest earnings during a stock earnings call.

And here's what he just said:

Facebook CEO Mark Zuckerberg said during a call with investors that “on Christmas Day, people bought almost $5 million worth of content in the Oculus Store.”

Now Facebook isn't exactly reputed for its honesty, but misstatements on a public company's financial reports are quite literally a criminal offense.  As a veteran game analyst once put it to me: "Earnings reports are reliable, because if they're wrong, someone can go to jail."

But what does $5 million worth of content in the Oculus Store purchased on Christmas Day tell us? A fair amount, thanks to the magic metric called ARPU:

That is, average revenue per user. The next trick is estimating a reasonable ARPU.

Oculus Store content sells anywhere from as low as $1.99 (for instance, new playable levels on games like Beat Saber), up to $29.99 and $39.99 for a full game, with the top rate for hits like Beat Saber and SUPERHOT VR tending to be in the $24.99-29.99 range.

So assume Quest owners bought content on Christmas Day at an ARPU rate from between $5 to $25. Since the Quest has been on the market since last May, existing owners will tend to buy low-priced DLC on Christmas, while new owners -- "For me? A VR headset for Christmas?!" -- will tend to buy full games like SUPERHOT VR.

Do some basic math, dividing $5 by $5 million and $25 by $5 million, and that suggests there are anywhere from 200,00 to 1 million Quest owners.

I suspect the figure is roughly in the middle of those poles, in the mid-six figures. Which would also mean that SuperData's 705K estimate is not that far off.

What's abundantly clear from Zuckerberg's $5 million figure is this: There's definitely not much more than 1 million Quest owners out there right now. 

Zuck pic originally posted here in 2016 and oh what a journey it's been since then.

Comments

[Susan Wilson]

So a bunch of people got a fancy face mask for xmas and bought something to do with it. I'd like to see a report on how many of them are still using it in a few months.

[Paula Scott]

I wish wish wish ... they would add a search engine for our music will be happy to pay for my songs against I can enjoy my music in beat saber .. pls

[Ori]

As a Quest owner from day 1. I can say that my Quest gets used at least 4 times a week...

[dijitz]

Jealousy is a bad look, Susan. I hope you get to check out VR one day.

[Michael Jones]

This is interesting but flawed. It doesn't take into account that Quest owners might not have bought anything at all on Xmas Day. It assumes that all Quest owners bought something. I didn't. Why should an existing Quest owner buy a game on Xmas Day? They could have bought whatever they want on a previous day when they weren't going to annoy family and friends by playing games instead of enjoying a family day. Most Quest owners would not have used the headset on a family day. The family would not have appreciated it. If they wanted to show off their headset to the family on Xmas day, they would have used a game bought previously.
New owners are more likely to have used the headset on Xmas day because it's new and the gift giver would have encouraged them, but for many, they might not have had time on a family holiday to set up their Quests, open an account, choose a game, etc.
If they did have time. It's likely that they would have played some of the free games or demos first - or just tried the tutorials.
It's also possible (but less likely) that new Quest owners would have bought Steam games and played with a Link. And many new Quest owners would already own a Rift or Go and have a selection of games available on cross-play.
Anyway, you cannot estimate the number of Quest owners by the amount spent on a particular day unless you know what proportion didn't buy anything on that day.
I don't know how many Quest owners didn't buy games but I didn't buy any so I , for one, don't feature in the writer's calculations.
All we can assume is that there are more Quest owners than the writer has calculated. Probably many more.
I think it's amazing how much Zuckerberg says was, in fact, spent on Xmas day. I am a gamer and I have four VR headsets, but I wouldn't use them on a family holiday. It would be interesting to find out how much was spent on 26th December though.

[Billy]

Got the oculus go last year 2018 and quest this year still using both

[Eric]

Good point Michael. I don't believe I purchased anything on the Oculus store with my Quest on Christmas Day. Oculus had been running sales during the holiday season, and I purchased content prior to Christmas Day. I'm guessing, but about 90% of the users who bought content were new users who got a Quest for Christmas. When Oculus Quest was initially released, it was back-ordered for a month or so. So there was a good size portion of Quest users from the end of May until a week before black friday when the Quest was out of stock.

I'd think Susan will be surprised if she saw those numbers. Oculus is doing a good job of updating the Quest with new features and content. If Facebook Horizons is a hit, then those numbers will explode. After all, you have to hunt to find a quest one month after Christmas due to backorders.

[Wagner James Au]

ARPU doesn’t assume every Quest owner bought content on that single day, it’s the average revenue of all owners. So for example - and these are hypothetical numbers — if 200,000 Quest owners bought a $30 game on Christmas while the remaining 500,000 owners bought nothing, the ARPU for that day about be about $8.50.

[Jeremy]

I agree with Michael. Here's one more way the data is flawed. I ordered our Oculus quest as a Christmas gift for my son, but it was backordered when I placed the order in early December and we didn't get ours until Jan 10 or so. And the day ours arrived I checked and they were backordered until mid Feb. Just checked today (Feb 1) and they are now backordered until March 2. So there is plenty of demand... Lots of folks have ordered who won't spend money on titles until their quest arrives.

[Jeremy]

I think if anything, the Christmas day figures are an estimate of how many NEW quest owners there were on Christmas day. If 600-700k quests were unwrapped that day, that is pretty exciting, especially when you figured anothther batch of them are arriving on front porches every week from backorders.

[Cake]

For reference, during Christmas there was a sale where a lot of games were discounted until around January 1st, I think. Oculus pushed the sale for people to buy stuff. I think a lot of games were discounted anywhere from 30%-50%. That might figure into your estimates as well.

Also, I use my Quest every day or so. Whoever said that is probably just being snide about VR until they try it themselves.

[TonyVT Skarredghost]

200K to 1M is a pretty big range...