Why Meta is slashing prices for its VR headsets

META’s VR headsets are getting a big, but inevitable, price cut because consumers aren’t buying as much as expected.

Company today declared It drops the prices of its still-new Meta Quest Pro from $1,499.99 to $999.99, while its Meta Quest 2 drops from $499.99 to $429.99. That’s roughly a 33% drop when MetaQuest Pro was introduced to businesses — and that’s a significant drop from the fanfare it launched with support from Microsoft ( MSFT ) and Accenture ( ACN ). )

Declining consumer interest isn’t a meta-specific problem — the VR market, the games industry at large, saw its 2022 sales decline 2% year-over-year to $1.1 billion. Research From NDP but the company struggled to keep even new headset owners interested in the product. (Meta VP of VR Mark Rabkin recently broke the news to employees, According to a Feb. 28 report by The Verge.)

“Unfortunately, the new partners that are coming in, the ones that bought it last Christmas, they’re not as into it as they were at the beginning,” he said, according to The Verge.

ITC research director Ramon Llamas said: “The market for second-hand and refurbished devices allows consumers to access lower prices, and if we factor in the fear of inflation, consumers are smart and will find a way to get what they want. They want less.”

He added: “It’s part of a macro move, especially since I think it’s too early to say they’re cleaning out Quest 2 inventory because Quest 3 won’t be showing until the end of the year.”

A man wears a virtual reality headset at the Meta stand during the Ninth Summit of the Americas in Los Angeles, California, U.S., on June 8, 2022. REUTERS/Mike Blake

Very challenging

A lot has sunk into the pursuit of meta VR. Reality Labs has lost billions in the past year alone — Reality Labs is projected to lose $13.7 billion in 2022, up from about $10.2 billion lost in the segment in 2021, according to its latest report from Meta. Income statement.

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Losses aside, Llamas says Meta’s spending on VR has given them a “very tight grip on the VR device market,” as they held between 45% and 82% of the VR market share last year. Although it’s still a new market, he says, the play for them now is more leaders in sets if they want to maintain their lead.

“If I’m Mark Zuckerberg and I want people to come into the Meta family, the easiest way to do that is to lower prices,” Lamas told Yahoo Finance. “The more people on board, the better.”

Ally Garfinkle Senior Technology Reporter at Yahoo Finance. Follow her on Twitter @agarfinks And on LinkedIn.

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