Quest 2 Install Base STILL Likely Below 20 Million, Based on Meta Financials & Inside Info

Lost in all of last week's excitement over Meta's latest (and surprisingly good) first quarter 2023 financial report, followed by the controversy over whether it's given up on the Metaverse, is this pretty surprising revelation:

Meta's frontline VR device, the Quest 2, still has not reached an install base of 20 million. (From all available evidence.)

How do we know? Well:

Back in March, a leaked Meta presentation published by The Verge's Alex Heath put the total Quest install base (both Quest 1 and Quest 2) at "nearly 20 million Quest headsets to date".  

Not counting the Quest 1 install base, and factoring in an earlier New York Times report plus Meta's Q4 2022 financial report, I put the post-2022 holiday install base of Quest 2 at around 18 million.

But surely the Quest 2 install base is 20 million+ by now, right?

Probably not:

Meta's Q1 2023 earnings report has revenue from Reality Labs, its XR/metaverse division, as $339 million for that quarter.

Now even assuming all that $339M revenue is from Quest 2 sales (now at $399 MSRP), that comes out to 847,500 units sold in Q2 2023 at most. (But probably closer to 800,000, factoring other revenue sources.) 

Which means the Quest 2 install base is currently closer to... 19 million.

By way of comparison: The PlayStation 5, which launched around the same time and at about the same MSRP, currently has an install base over 30 million -- even despite a long shortage of available units in stores.

A reporter from NASDAQ recently asked me if Meta has any prospects at growing its Quest install base, and my forecast was pretty bearish. Not just because it still hasn't been able to gain mass market traction despite being able to promote it to its billions of consumers on Facebook and Instagram.

But because, fundamentally, evidence strongly suggests that VR is simply not a mass market product, since half the population tends to have trouble using it without literally vomiting.

Which might have been something Meta could have considered a bit more carefully when it bought Oculus nearly a decade ago.

But more on that, as the saying goes, in my book.

Comments

[Martin K.]

> But because, fundamentally, evidence strongly suggests that VR is simply not a mass market product, since half the population tends to have trouble using it without literally vomiting.

Fun fact: evidence strongly suggests that alcohol is simply not a mass market product, since a large part of the population tends to have trouble consuming it without literally vomiting.

As the saying goes: The dose makes the poison. Few people get sick from VR apps that don't use artificial locomotion. It is no coincidence that Beat Saber is one of the most popular VR apps. (One might wonder why so many VR gamers choose to use artificial locomotion even though many of them got sick from it in the past and/or are still getting sick when they play for too long - but the same question can be asked about drinking alcohol. The simple answer is probably: it is fun until it isn't.)

How well would a VR headset sell if consumers would buy it instead of a large TV set? We don't know yet because no existing VR headset is good enough to replace a TV set yet. Also: do companies like Meta, Apple, Google, or Microsoft have sufficient interest in selling VR headsets that replace TV sets when their stated primary interest is developing wearable AR glasses to replace smartphones?