Valve's Profit-Making Approach to Virtual Reality More Sustainable Than Facebook's Loss Leader Play (Comment of the Week)

Pictured: Half-Life Alyx, bundled with Vale's Index HMD

Robert Scoble made a good case for Oculus requiring Facebook log-ins as a "strategy tax" to compete with Apple, but in Comments, reader "Seph" argues that Valve has the better, more sustainable approach to VR, both through its HMD partnership HTC, and its SteamVR distribution platform:

If any VR is unsustainable it's Facebook's. As mentioned there it's currently subsidized, Facebook loses or closer to breaks even on each Oculus sold, and started off billions of dollars in the red with it from the acquisition in the first place.

Meanwhile Valve still has trouble keeping the Index in stock, and in addition to HTC there's other OEMs like HP that are releasing newer and better SteamVR headsets like the Reverb G2.

If you expect a headset to drop and take off like the iPhone, by that measure VR will always be a dud and is failing.

Both Facebook and Apple seem to assume HMDs will see mass sales like an iPhone, but Seph says a better approach seeing it as a hardcore gamer peripheral:

If you see VR as just a peripheral not unlike the five-button gaming mouse or keyboard with macro keys and there's an ecosystem of a dozen companies like Razer, Logitech, Corsair and etc., releasing really expensive products once or twice a year, then its perfect to see how all these VR companies are viable and VR isn't going anywhere.

Facebook might be doomed in VR if they need to figure out how to make money off ads in VR rather than money off the hardware or software.

Valve will be fine though, they're selling their hardware very well and of course make money off every game supporting SteamVR.

HTC, HP, Pimax and etc can be fine too, so long as they continue to approach it from an angle of selling a peripheral with a niche audience and mark up the price of the hardware appropriately.

SteamVR is the healthiest ecosystem presently when it comes to actual profiting and sustainability. I omit PSVR from the sustainable part given the coming generational leap and what that might do to the current PSVR install base. Still Sony too is ahead of Facebook as well where it matters, making money.

This sounds right for reasons I'll delve into more this week. 

Comments

[Adeon Writer]

I compare VR headsets to computer monitors. No one thinks there needs to be a company that just makes the killerapp de-facto computer monitor that everyone needs. You just need *any* computer monitor. All that matters is the total amount of people using VR, all in all, is going up. It doesn't matter which one they're using. There will probably never be one VR headset company that just becomes The One Headset, and if there was, that would be A Very Bad Thing For VR.

[camilia fid3lis nee Patchouli Woollahra]

You know what the good thing about taking small profits as you go along rather than repeatedly soaking up the costs for a big payout is? You can reinvest the profit immediately in your ecosystem and you get an earlier warning when what you're doing isn't working out and your losses can be cut earlier.