Meta appears to be planning to raise the price of its VR headsets moving forward, according to a recent internal memo, which company leaders hope will combat rising costs. Meta may also be retiring the Quest 3 and 3S line a little later than expected.
The News
As reported by Business Insider, a December 4th memo from metaverse leaders Gabriel Aul and Ryan Cairns notified employees that Meta has “made a shift” in its VR efforts which could include price increases to combat costs associated with tariffs, as well as keep existing hardware in the market for longer.
“Our devices will be more premium in price going forward, but we’ll have a healthier business to anchor on and free ourselves from feeling existential about any singular device’s success,” Aul and Cairns’ memo reads.
The memo, which thus far has only been viewed by Business Insider, also includes a call for high-quality software experiences meant to match the “excellence” of its devices. Additionally, Aul and Cairns’ said Meta will “ship new hardware at a slower cadence going forward.”
“We’re committed to VR for the long-haul so we need to align our business model and roadmap to an approach that will make this possible,” the memo says. “We’ve been working hard to bend the curve and accelerate ahead of the category’s natural growth rate, which means running multiple programs in parallel as well as carrying costs like tariffs and subsidies for content, GTM, and devices.”
Notably, the memo also included info on a critical delay of a puck-tethered XR headset, and a new Quest headset which is set to be a “large upgrade” in capabilities from current devices, and will “significantly improve unit economics.”
Meta currently sells Quest 3, starting at $500, and Quest 3S, starting at $300—the latter of which is currently on sale for $250.
My Take
Meta regularly subsidizes Quest in an effort to recoup on software sales, making them technically cheaper than they might otherwise be. It’s a strategy console platform creators have been doing for ages, and it certainly works at getting people through the door.
But now, it seems we’re headed for another rough patch that Meta needs to navigate if it wants to continue its role as the holder of the most popular VR platform. And above all, I’m curious how Meta will keep serving the entry level user while pushing prices higher. It’s basically stemmed the flow of cash to third-party studios, making platform exclusives few and far between nowadays. And competition is coming from both sides: Google’s Android XR represents a threat to the low end, and Valve’s Steam Frame on the enthusiast end of things.
While the memo said the next Quest will “significantly improve unit economics,” I’m afraid that doesn’t really mean much since it didn’t come with a supporting statement. Relative to what? Previous pricing estimations? Current prices?
Anyway, Meta could hike prices in a number of ways we’ll be watching out for in the coming year: Quest 3 may get a price bump over its regular $500 MSRP, leaving Quest 3S at the low end. This could keep the flow of new users coming at the regular pace, while effectively only “taxing” users looking for the technically better headset.
Then again, both headsets may see a modest price bump, which is then teased down in successive sales periods, like it did with Quest 2 when that one was hiked from $300 to $400 following supply chain shock stemming from the COVID-19 pandemic. The company could also equally leave pricing the same, and only apply hikes on forthcoming devices.
Any which way, I’d expect Meta to attempt to soften price shock with included first-party games (even older ones) and possibly longer free memberships to Horizon+, its monthly game service.
And whatever the case, it’s pretty clear the Quest 3 platform is going to be around for a while, which means developers will need to keep it in mind even as Meta tries to push better hardware, which could include more powerful chipsets, higher pixel density displays, and stuff like built-in eye-tracking.
