It Sure Looks Like the Quest 2 Install Base is Now About 9.4M -- Just Under Zuckerberg's 10M+ Target (UPDATED)

Update, 2/4: I initially estimated a Quest 2 install base of nearly 7 million but forgot to count Portal sales and accidentally separated out Oculus app revenue. I've revised the estimate (and title) accordingly. Apologies for the error! (Hat tip: Amal Dorai.)

With Facebook/Meta's latest earning report, it's once again time to play "estimate Quest 2's install base and activity from intentionally obscure revenue numbers". With this latest Q4 2021 report, at least, the company has helpfully separated its XR-related "Reality Labs" revenue (i.e. Quest sales) from as far back as Q4 '20 -- which as it happens, is when the Quest 2 went on sale. Here we go:

• Total XR revenue since Q '20 is nearly $3 billion (rounded upward).
• Portal is part of Reality Labs' offerings and as has sold an estimated 1 million units from Q1 '20 to Q4 '21 at an average MSRP of $199 for about $200M in revenue -- leaving likely Quest 2 sales to be the remaining $2.8 billion of the revenue. 
• Which means, given the Quest 2's base MSRP of $299, that the total Quest 2 install base is as low as 9.4 million units.

Meta's Mark Zuckerberg has stated that his "escape velocity" target for Quest 2 sales is 10 million, and we still seem to be just beneath that. Quest 2's install base by August of last year was about 5 million, and despite early reports, holiday sales were not strong -- or strongly growing. Compare Reality Labs' Q4 '20 revenue to that of Q4 '21: It's only up by $160 million, i.e. just 535K more Quest 2 sales sold in the holiday season of 21 compared to the holiday season of '20.  

Speaking of Oculus app revenue, we have some good indication of how many Quest 2 owners actively buy them:

Meta’s Director of Content Ecosystem Chris Pruett shared further details on Twitter as well, noting that eight titles on the Quest store have made over $20 million in gross revenue (one of which we know to be Beat Saber), while 14 have made over $10 million and 17 over $5 million.

Additionally, over 120 titles have generated more than $1 million in revenue on the platform.

The top-selling Quest apps go from $10 to $30. So that means those top grossing apps have between 666K and 2 million owners. Which is just a fraction of the install base, even for the eight "hits" that grossed over $20M.

Maybe I'm missing something in my back-of-envelope map (please let me know if I'm erring), but based on the latest earning report, the Quest 2 still remains a niche product, not even hitting Zuckerberg's rather modest install target of 10 million. 

Chart via Kent Bye who has some good analysis in this Twitter thread:

1/ @Meta's Earnings call is just getting under way.https://t.co/ag60tCPmio

This is the first time that they're breaking out their XR costs with Reality Labs Operating Loss, which looks like it's been around $12.293B over the last 5 quarters.

I'll try to capture other XR news👇 pic.twitter.com/bAHij12kbR

— Kent Bye VoicesOfVR (@kentbye) February 2, 2022

Comments

[seph]

Many don't rely on or use the Quest app store, they go straight to Steam and use the Quest 2 as a PC peripheral.

There's almost no upside to using the Quest store and getting Android version of games and apps vs. getting the Windows/Steam versions with better graphics and performance. The link cable isn't even required anymore, hasn't been since Virtual Desktop made wireless playing possibly and for the past year Quest's Air Link has made wireless PC playing even easier.

Steam's Hardware Survey still shows the Quest 2 as the most used VR headset on Steam by far, and it grew its lead over Valve's own Index and everything HTC released over last year.

The Quest 2's popularity on Steam means something, maybe even more than how its performing in the Quest app store. The only people that have to use the Quest app store are those without a PC/laptop and a wireless router and that's maybe not a lot of people, especially among those buying into a niche like VR.

[Mondy]

Also Sidequest have a lot more titles, quality titles than the Quest store and is the first place that apps that make it into applabs arrive before they eventually migrate to the Quest store.

Everyone jumped onto this "10 million headsets sold" hype last year, even though it was quickly admitted by Qualcomm and/or Meta the figure was an average of third party estimates. Something most people overlooked or preferred to ignore.

[Optimum Email]

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