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I doubt that. The Quest 2 is probably being sold at a tiny loss at launch, just like most gaming consoles are, and will at the end of its lifespan be sold at a

by jsnell 5y ago

I doubt that. The Quest 2 is probably being sold at a tiny loss at launch, just like most gaming consoles are, and will at the end of its lifespan be sold at a small profit. But where they're looking to make the money is from getting a cut from software sales, again just like consoles. Advertising is a garbage business compared to owning a popular software platform like that. Let's do some back of the envelope calculations. Let's say you can show 10 ads per hour, the average VR user uses 30 minutes of VR per day, a CPM of $10, a 50% platform vs. app cut of ad revenue, and a device lifetime of 5 years. I think these are all generous estimates. 10 ads / hour * 0.5 hours / day * 365 days / year * $10 / 1000 ads * 50% * 5 years = $45.60 total ad revenue for the lifetime of the device. They cannot be subsidizing this for $400 and expecting to make it up on ads. The numbers just don't add up. (But I don't think they're selling it for a multi-hundred dollar loss at all.) On the other hand, in 9 months of using the device I've bought about $150 in software, with Facebook's cut probably being about $45. Except that is over 9 months, not 5 years. This is where the money is.

Retric 5y ago
That’s some very low estimates for lifetime VR advertising revenue based on just 900 hours usage per device and 10 ads per hour. By comparison FB makes 32$/user as a global average in a world of ad blockers. The kind of users buying VR headsets are worth significantly more than average, they can’t block ads, and they practically need to take the device off to skip them. This isn’t 4 year olds mindlessly watching YouTube, these are the ideal demographic to sell stuff. At even 3.5x your ultra low estimate FB is at 1/2 the retail price of the device. Massive subsides are an easy choice for FB assuming VR doesn’t die off quickly. Still even using your numbers a drop from 350$ to 300$ is a big deal before considering other revenue from app sales etc.
- sofixa 5y ago
  > By comparison FB makes 32$/user as a global average in a world of ad blockers Isn't the vast majority of FB usage on mobile, where ad blockers aren't even close to being as popular as on desktop ( and they still are probably used by a minority of people)

by jsnell 5y ago

Retric 5y ago

That’s some very low estimates for lifetime VR advertising revenue based on just 900 hours usage per device and 10 ads per hour. By comparison FB makes 32$/user as a global average in a world of ad blockers. The kind of users buying VR headsets are worth significantly more than average, they can’t block ads, and they practically need to take the device off to skip them. This isn’t 4 year olds mindlessly watching YouTube, these are the ideal demographic to sell stuff. At even 3.5x your ultra low estimate FB is at 1/2 the retail price of the device. Massive subsides are an easy choice for FB assuming VR doesn’t die off quickly. Still even using your numbers a drop from 350$ to 300$ is a big deal before considering other revenue from app sales etc.

sofixa 5y ago
> By comparison FB makes 32$/user as a global average in a world of ad blockers Isn't the vast majority of FB usage on mobile, where ad blockers aren't even close to being as popular as on desktop ( and they still are probably used by a minority of people)