Mystery: Quest 2 Install Base Must Have Passed Zuckerberg's 10 Million Target By Now - So Why No Meta Announcement?

With Meta's Q2 2022 earnings report out now, it's once again time to engage in some Quest 2 install base tea leaf reading. I've written about this multiple times (most recently here), but the basic gist is: Most or nearly all the revenue from Meta's Reality Labs division comes from sales of its Quest 2 hardware device, with an MSRP of $299. So doing the back-of-envelope math:

• Back in April, I calculated the Quest 2 install base as about 11-13 million.
• According to the latest revenue report, Q2 revenue for Reality Labs was $452,000,000 million.
• Which suggests up to 1.5 million more Quest 2 units were sold between April and June 2022.
• Giving us a grand total Quest 2 estimated install base of 12-14.5 million units maximum.

Even at a very conservative estimate, Quest 2's install base crossed over 10 million months ago.

Which brings up a new mystery: Why hasn't Meta announced Quest 2 hitting a 10 million milestone?

10 million is, after all, Mark Zuckerberg's (somewhat arbitrary) target goal for the Quest 2. As he put it in 2020:

[Reporter] Casey Newton: So where are you on this long road to making VR mainstream?

Mark Zuckerberg: VR, I think is well on its way. We had this milestone in our mind that first we needed to get the technology to the place where you could have a standalone headset, it could be portable, it could be high quality — do the tracking and all that. And Quest was the big milestone on that. Then, from an ecosystem perspective, we believed that if we get to 10 million units active, then that’s kind of a critical magic number.

At that point, you have a self-sustaining ecosystem. That’s the next big push: how do we get the technology to be more accessible to more people? A big part of that was driving it to be more affordable, and making it more portable... And we’re not at 10 million yet, but I’m optimistic that over the next few years, we’ll get there. And that will really be a new stage of VR.

One possibility is a milestone announcement will come sometime soon, so stay tuned for that. (Hopefully.)

Another possibility? The growing realization that 10 million units sold in about 2 years (Quest 2 launched in October 2020) is frankly not that impressive. Consider:

• The Playstation 4 sold over 18 million units in its first year.
• The Nintendo Switch also sold nearly 18 million units in its first year on the market.

So announcing 10 million as a milestone can easily backfire, especially when Meta also has to report losing nearly $3 billion from the last quarter alone.

Definitely open to other theories in Comments!

Comments

[Kitty Revolver]

don't forget he is raising the price to $400

[Zack]

Also, consider Meta might actually experience terrible numbers of ACTIVE users... I personaly worked in VR since DK2 days, 2015 or so. I own a Quest 1, and although I believe in this tech's future, I still have to fight my way into my next VR session, every not so often time I decide to wear it...

So only guessing here... if say 50%+ of Quest2 owners don't even use their headsets past the first 30 hours of "novelty and excitement" phase... THAT would be really embarassing for them... and I feel that's the reason why 10M units is not enough to have a self-sustaining ecosystem...

[Adeon Writer]

I don't think it's fair to compare it to consoles since those are just new, iterative models in an already established industry. Facebook's leading the way pushing a new technology instead of an upgrade.

[seph]

When you consider from the beginning when Oculus was purchased Mark said and understood VR wouldn't be popular until 10-20 years into the future it makes sense why they don't care a ton about the success or failure of existing hardware and software.

You mentioned game consoles; VR is at a stage of the Philips CD-i, TurboGrafx-CD and Sega CD. We might still have an Atari Jaguar and Sega Saturn to go before VR has its Playstation moment years from now.

I don't know that VR and AR headsets are as obvious an eventuality as disc game consoles were, but it is perfectly normal for new tech to start off clunky and expensive before the stars align and it pays off big for some company.

Meta understands that the Quest is at best the Palm Pilot of VR, so why celebrate when the world's still Nokia? What they really care about is iterating until they've made the iPhone of VR too, which is why they've been talking about their four latest hardware prototypes more than anything with the Quest.

[Martin K.]

Zack has a good point about active users.

Another point might be that 10 million Oculus users is a fuzzy number: Does it include Oculus Rift (S)? Does it include Quest users who use Oculus Link?

And yet another point is this: 10 million active users is not a completely arbitrary number. It's Meta's estimate for when there is a self-sustaining ecosystem. In Zuckerberg's words:

> Once we get to, and cross, this threshold [of 10 million users], we think the content and the ecosystem will just explode

(a bit after https://youtu.be/o7OpS7pZ5ok?t=330 )

So, if they reach 10 million users but no content explosion is following, that would just mean that they were wrong about that estimate. And, of course, the next question that people would ask is: if 10 millions are not enough, are 20 millions enough? 50? 100? And why should we trust your answer today, when you have been wrong about it in the past?

And who can say that they are already seeing that content explosion coming? The 9 most popular "apps" on Meta Quest remind me of the good old days of the Oculus Go ( https://www.oculus.com/experiences/quest/section/1453026811734318/ ); the top 3 games on Meta Quest are all older than 3 years ( https://www.oculus.com/experiences/quest/section/891919991406810/ ). That doesn't mean that we won't see that content explosion in one or two years and the estimate of 10 million users is actually correct; but it's too early to tell.