Facebook Ships Oculus Rift: What Should You Expect?

Facebook Ships Oculus Rift: What Should You Expect?

Facebook, Inc. (FB Analyst Report) has finally started shipping its much-awaited virtual reality (VR) headset, Oculus Rift to its consumers since yesterday in as many as 20 countries.

The company had been taking pre-orders for this device since the first week of this year.  Rift comes with built-in headphones, a microphone and sensor and an Oculus remote. Initially, Oculus is deploying Microsoft Inc. (MSFT Analyst Report) Xbox One controller as its own Oculus Touch motion controllers are expected to be released in the second half of 2016.

To begin with, the company has added over 30 games including Lucky’s Tale, Chronos, VR Tennis  and the multiplayer EVE: Valkyrie, to name a few. Apart from games, the company is also rolling out a number of Oculus videos and photos to engage users. Going ahead, Facebook plans to roll out more content including feature-length movies for the VR world.

While the launch of Oculus Rift has been much anticipated, concerns regarding a number of issues remain. Its hefty price tag is a case in point. The expensive $599 headset requires a powerful $1000 PC to operate. This makes the device affordable for only a handful of customers and is primarily targeted toward hardcore gamers.

Facebook has been working to develop compatible content since 2015 when it declared that it will be spending as much as $10 million on the development of games. It has already taken a number of small steps (like the 360-degree video and the Gear VR headset) to encourage developers to create content. For this, the company had released The Rift SDK 1.0, a special version for developers to enable them to develop content.

Facebook had acquired Oculus VR, a virtual reality technology company, which developed the Oculus Rift gaming headset in 2014, for approximately $2 billion. Since then, it has been pushing to take virtual reality to the mainstream audience.

Though the initial Rift customers would mostly be gamers, the company gradually intends to extend Oculus’ technology to new industries such as communications, media and entertainment and education, thus driving growth over the long term.

According to a 2014-2018 report from KZero, a U.K.-based consulting and research firm that focuses on virtual reality, the market will grow exponentially and could be worth $5.2 billion by 2018. The company also expects the active user base to grow from 0.2 million in 2014 to 42.8 million in 2016 and cross 170 million by 2018.

Despite the odds, a big positive for Oculus Rift is the first mover advantage over its prime competitors like Alphabet (GOOGL Analyst Report), Microsoft, HTC and Sony Corp. (SNE Analyst Report), which are yet to ship their own offerings.  

Currently, Facebook carries a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>