Analysts: Don’t bet on big sales for Facebook’s Oculus

Sarah Frier
Bloomberg News

Facebook Inc.’s Oculus Rift, on sale for the first time Wednesday, is intended to usher in a new era of virtual reality computing. But if Wall Street’s expectations hold true, that will happen very slowly.

Most analysts with estimates for the Rift expect sales in the low hundred-thousands while just a fewsaid sales may top 1 million. The majority declined to estimate, saying the device isn’t a big deal for Facebook.

Oculus “would almost certainly be a rounding error inside of Facebook for now,” said Brian Wieser, an analyst at Pivotal Research, who said he’s not estimating sales yet. Gene Munster, an analyst at Piper Jaffray, called Facebook’s investment in Oculus a “non-event in 2016.” He expects them to sell a few hundred thousand units at a loss.

That wouldn’t be a disappointment for Facebook, which has set the bar low. Chief Executive Officer Mark Zuckerberg compared the first year of Oculus with the first year of smartphones, when the BlackBerry and Palm Treo debuted. Zuckerberg said he expects the virtual reality headgear to start being popular among hardcore gamers, and spread from there.

The device costs $599 and is expected to ship beginning March 28, Facebook said Wednesday on its Oculus website. The device, which comes packaged with two virtual reality games, will be available at some retailers beginning in April, the company said in a blog post.

Many potential customers would have to purchase more expensive desktop computers or graphics cards that work with Oculus, before buying the device. Just 13 million PCs worldwide next year will have the graphics capabilities needed to run VR, according to an estimate by Nvidia Corp., the largest maker of computer graphics chips. By 2020, however, the market for virtual reality products is projected to reach almost $16 billion, according to researcher MarketsandMarkets.

Despite the potential slow start, there has been plenty of anticipation for the Oculus Rift, said Rich Greenfield, an analyst at BTIG.

“One million units globally doesn’t sound crazy given the pent-up demand,” he said.