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Will the Oculus Quest 2 sell well this Christmas? – Analysis

Will the Oculus Quest 2 sell well this Christmas – Comparative Analysis

Before we hit the madness of Christmas, Facebook unveiled the Oculus Quest 2 (after a series of leaks). The battleground is set, and the arena of festive capitalism welcomes its combatants: Facebook wants the standalone VR headset to become the hot consumer tech item of this holiday season.

What are the chances of the headset coming out on top? It is facing stiff competition against the Xbox Series X/S and PlayStation 5, while battling the headwinds of a global recession during a destructive pandemic. How well could it do in the circumstances?

Based on my research, I predict that:

  • The global recession will have a small and insignificant impact on Oculus Quest 2 sales;
  • The standalone VR headset will not sell as well as the Xbox Series X/S or PlayStation 5;
  • The headset will sell well, but not as well as the Oculus Go last Christmas.

Ready? Here’s my reasoning for why.

Oculus Quest 2 and the worldwide economic recession

Buoyed by government finances, some markets are in stasis as they weather the pandemic and social distancing. While many governments are doing what they can to promote consumer spending to help the economy bounce back, many people are withholding their finances as they weather potential job losses and future uncertainty.

We are experiencing a global recession, so you would think that consumers are less likely to buy them. But not the video game crowd.

While the hospitality and retail industries took heavy losses, the video games market thrived under lockdown. Animal Crossing: New Horizons was one of the most popular games during lockdown, capturing the internet and selling over 20 million copies. (I am still salty that Amelia left my island after three days).

Nintendo saw its profits soar by 41 per cent, as more than half of gamers buy digital editions. While enforced self-isolation would have contributed to higher home console sales, the titles are still relatively expensive compared to other consumer products. When money became tight, traditional video-gaming – an expensive pastime – weathered the issues and soared in popularity.

The same happened in 2008, when gaming companies braced for the last economic recession. Despite a struggling financial market, sales of the Wii skyrocketed to stardom. One paper commented that Nintendo seemed recession-proof; yet the same can be said for other console manufacturers, who benefitted from the popularity of Grand Theft Auto IV. The video games market is resilient to economic downturns.

The Oculus Quest 2 is partially marketed to these resilient gamers, who are willing to pay the cash for new and exciting products. The market conditions didn’t sway them before, and may not sway them now.

Oculus Quest 2. Photo credit: Oculus.
Oculus Quest 2. Photo credit: Oculus.

Should I get the PS5, Xbox Series X/S, or Oculus Quest 2?

But beyond the overriding economic conditions, the Oculus Quest 2 is facing off against two massive gaming behemoths who are going all-out on their marketing. The Xbox Series X/S and PlayStation 5 are some of the most anticipated consumer tech products of the year, with dedicated fans that are ready to buy them from day one.

Demand for the consoles is very strong. When the PS5 opened pre-orders on 17 September, multiple sites sold out in a matter of minutes. In the case of Amazon UK, it sold out in 20 minutes after going live at 9am that day.

The consoles are also competitively priced. Both feature digital versions that are cheaper than its full-featured siblings, lowering the barriers of entry into the next console generation. Xbox is particularly competitive, offering a $299.99/£249.99 console which could be paid in monthly instalments. The company also offers Game Pass for a competitive price, offering a vast library of titles at launch.

The Oculus Quest 2 competes in price, but lacks the wealth of content that the other consoles feature. The platform lacks the IP and first-party titles that shifts hardware. While Microsoft has Master Chief and PlayStation has Kratos, the standalone VR headset lacks the equivalent heavy-hitting mascot.

Most gamers will be choosing between the consoles this Christmas. When the same audience has to decide between the next big consoles or Oculus, most would pick the former.

PlayStation 5 will likely perform well this Christmas. Photo credit: Sony.
PlayStation 5 will likely perform well this Christmas. Photo credit: Sony.

Price elasticity and demand

What about the rest of the world? While gamers pick their console, the Oculus Quest 2 also targets a different group: the general consumers interested in trying something new. After all, the headset has powerful social features and games which are fun to play within a family; they are features which would entertain a very different market, though no less profitable. As an example, Nintendo releases first-party titles dedicated to hardcore fans (Zelda, Mario) as well as experimental ones geared towards the wider family (Ring Fit Adventure, Wii Fit).

Can the Oculus Quest 2 hit the top spot in markets, by reaching the more casual audience? Certainly, because its little brother performed well this time last year. The Oculus Go outsold the Nintendo Switch in December 2019, outstripping competitors during Black Friday and Cyber Monday. By comparison, the original Oculus Quest – priced at $399.99/£399.99 and hailed as the best thing since sliced bread – sat at number 43. This is still very good, but not quite wiping the market like a home console would. Consumers want to try VR, and do not mind accessing lesser-quality 3DoF experiences as long as it is cheaper.

That said, $150 was a very low price point. At that price it became an easier purchase for many families who wanted to try VR for the first time, and it demonstrates that consumers react positively to lower prices. At $299.99/£299.99, the Oculus Quest 2 is still much more expensive than its predecessor. While it won’t sell as well as the Oculus Go, it will still perform well. For mainstream interest, the price might need to be lower.

Oculus Go. Photo credit: Oculus.
Oculus Go. Photo credit: Oculus.

Looking into the future

The Oculus Quest 2 is exciting for people in the immersive industry. With great specs and a cheaper price, many people are ready to try out the newest standalone VR headset. Over 90% of the people who bought the original Oculus Quest were new to VR; we may see the same effect with its newest version.

But the headset comes at a time where there is a one-in-a-gaming-generation shift in consoles, when hype is at a fever-pitch and pre-orders sell out in minutes. The VR headset is still priced relatively high as well, which may mean consumers may not be interested in buying it.

In any case, I am looking forward to Christmas and enjoying time with the family. As well as Demon’s Souls on PlayStation 5.