VR Sector Shows Signs of Strain

Looking to put a jolt into sales, the makers of higher-end virtual reality platforms have all implemented deep price cuts ahead of the holiday buying season.

While these across-the-board price cuts indicate that consumer interest in VR products has slowed, one analyst called them a typical move to entice people to jump in during this early-adopter phase of the VR market.

But it’s clear that three key VR players — Sony, HTC and Facebook-owned Oculus — are cutting prices to move the sales needle.

Among those moves, Sony said it has reduced the price of two VR product bundles by $50 — a combo with the Play-Station VR headset and camera now sells for $399, while an “all-in” bundle that includes the headset, camera, two motion controllers and a gaming title, PlayStation VR Worlds, is going for $449.

Meanwhile, HTC has chopped the sales price on its VR platform, the Vive, by $200 to $599. That was coupled with a report from Bloomberg that HTC is exploring strategic options that could lead to the sale of its VR business, and that the Taiwan-based company has already held discussions with Google.

Under a temporary summer promotion, Oculus in July cut the price of its Rift VR headset/hand-tracking Touch controller bundle in half to $399, followed by a permanent reduction on the product combo to $499.

All of those players are fighting for share in a small but growing market. With mobile VR headsets factored in, the Oculus-powered Samsung Gear VR headset kept its lead through Q1 2017, according to SuperData. The Gear VR was followed by the PlayStation VR (Sony has shipped more than 1 million units so far), Google Daydream mobile VR headsets, the HTC Vive, and the Oculus Rift.

Related: Another 'Promising' Week for Virtual Reality

Mike Bloxham, senior vice president of global entertainment and media at Magid, said the recent wave of price adjustments indicates that the companies are gearing up for the holiday buying season while also looking for ways to accelerate sales amid a period of sluggishness.

He also said that the price cuts should also drive enthusiasm for early adopters, stressing that their behavior doesn’t represent that of the mass market.

Citing recent Magid research, Bloxham said price remains the biggest impediment for consumers considering taking the plunge on VR by a wide margin (64%), compared to a perceived lack of content (34%).

Bloxham remains bullish about VR. “I think it does have huge potential,” he said, noting that product shipments are not the clearest barometer on the level of usage occurring the market.

“VR has the potential to shake things up and create a whole bunch of opportunities,” he added. The expectation, he said, is that VR will not only take hold in media and entertainment, but also in areas such as engineering, health care and education.

Magid and the VR/AR Consortium, a group that includes Turner, Warner Bros. and The VR Society, recently released a study based on a survey of about 2,000 U.S. consumers, showing that about one-third of all U.S. adults have used a VR device.

The study also indicates that the U.S. market of VR owners and “intenders” stands at 44 million.

Seeing is apparently believing, as 50% of those who have tried a VR headset reported “loving” the experience on a PC or console device, while 90% reported “liking” it on a high-end PC or console headset.