Meta Quest 3 may generate at least 10 billion in revenue for Meta in 2024.
Allow me explain my reasoning.
Quest 3 pictured above with the orange color strap.
Allegedly Quest 2 sold 20m units in approx 2 years (5 million every 6 months).
I think Quest 3 will sell at 2x the rate (compared to the Quest 2), as it offers 2x the value proposition to consumers.
In the image above you see the Quest 3 headset. It has 3 oval shaped dark areas on the front, the middle one is the Depth Sensor, and the two outer ones contain the color cameras + 2 black & white tracking cameras. In addition there are two cameras on each side facing downwards so as to capture your arms & torso, to better allow AI to create a representation of your whole body in VR & AR, a feature that will be coming to Quest 3 in December 2023 as a software update.
Interestingly Meta showed me a demo of the full body tracking running on Quest 2 at Oculus Connect 6. However a lot of other journalists at the time did not believe me, and obviously the feature never shipped for Quest 2, but in hindsight we see that Meta was actually working on this technology for Quest 2 at the time but didn’t ship it because it was not ready then.
At Oculus Connect 6 I was most impressed with the multiplayer VR experiences, such as the Dead & Buried arena with 3 players battling 3 players in the same space, and next to that was Star Wars TheVoid Experience.
The amazing feeling of multiplayer in real life experiences with Quest 2 was the reason I was so sold on it becoming a mainstream device. However these features never shipped with Quest 2. It never became the social device you could play with other friends in the same room, as long as they also had a Quest 2 on.
All of that changes with Quest 3, the promise of in real life multiplayer VR & AR experiences that I experienced at Oculus Connect 6 is now made real. When society at large discovers that Quest 3 can do this you will see VR families buying 2.5 Quest units per household because they know the family can play together in VR and or AR at the same time in the same room. It completely changes the dynamic of Meta Quest from a solo do it at home by yourself sort of thing to a do it with friends at a house party, or at a VR meetup, or together at a Hacker space or Maker space. This new social dynamic will make Quest 3 a must have for young & old worldwide. None of the journalists are talking about this yet, none of the youtubers think much about this yet, but eventually the public will catch on, word of mouth will spread, and Meta Quest 3 will sell like hot cakes!
Speaking to the value proposition:
The Meta Quest has two high resolution color cameras for high quality stereo pass through that makes it easy to not only see the world around you in full 3D color while you are using it, but also it’s easy to read your phone, your computer, and your watch without taking the headset off.
It’s depth sensor is so accurate you can use the Quest 3 to learn how to play the piano. Seriously.
This Meta Quest 3 commercial, that explains how you can learn the piano, makes you cry. Seriously. I've watched it twice. Recommended viewing:
Don’t even think about getting the Quest Pro instead, it has one color camera, the pass through is low resolution & it sucks by comparison to what you are getting with Quest 3. Support for Quest Pro ought to be lacking in theory compared to support for Quest 3.
Quest 3 at $499 is being sold at the right price point.
Pretty much any VR or AR product that sells for more than $700 dollars is dead on arrival. I have that intuition from talking to the former CTO of ODG back in 2016 when they really wanted to bring their high quality 6dof AR glasses to market at the $700 or below price point. The ODG AR VR glasses back in 2016 were in many ways (but not in all ways) on par with the best headworn AR VR headsets sold today. They did not have body tracking, hand tracking, or controllers, but they did have 6dof movement, and really tiny light weight glasses.
Alas Osterhout Design Group crashed hard financially in 2020 and had to step out of the AR VR race do to an inability to keep paying their employees.
A big selling point for Quest 3 will be the ability to use it to play Xbox Live Games, and also to watch television & movies that stay fixed in space while you cook, clean, and do your chores. This is possible because you will be able to clearly see the environment around you while the headset creates a little floating television that stays fixed somewhere in the room with you.
As for VR the graphics are so well improved that they have been compared to low end PC VR. Basically they are as good as early Rift & early Vive games from 2016.
Red Matter 2, pictured above, has been compared to the PCVR and PSVR2 versions of the game.
The Quest 3 will feel like having a low end PCVR headset, instead of feeling like the mobile phone graphics we had in the days of the Gear VR & Oculus Go. This is a big step up for mobile all in one VR graphics.
The Augmented Reality games you are about to experience with your Meta Quest 3 were previously only things you could experience with a headset like Magic Leap, or Hololens 2. Those AR headsets as you know cost well over $3000, and you are essentially getting that kind of experience thrown in for free with your new VR headset. In otherwords you are getting the value proposition of both the highest quality AR headset and a high end VR headset for just $499. It is an amazingly good value considering how expensive each of these technologies was until just recently. There were a lot of amazing games & experiences released for Magic Leap & Hololens 2 that very few people in the world ever got to try, but now, probably for the first time, everyone in your neighborhood can try this magical technology called Augmented Reality or Mixed Reality thanks to you, and when you get more than one headset, you can make it a multiplayer party in your house. You will see these headsets at only the very best parties in the world, that is how awesome it is!
Not only that but the controllers are actually Meta’s best controllers yet. No longer will the battery door accidentally slide open (it has a button release instead of a magnetic compartment) and the center of gravity on the controllers feels better because there are no more rings (this is possible because the Quest is now tracking your arms & torso to improve controller tracking & hand tracking). Thankfully the new Quest 3 controllers do not have the battery life & waking issues that the Quest Pro controllers have.
Quest 3 also pushes air through the tiny slits around the face of the unit, like a Dyson Air Purifier. This new heat design will allow the Quest to utilize more of it’s processing capabilities without throttling or slowing down.
Conclusions & Financial Predictions
I predict Meta will sell 5m Quest 3 units in 2023 + 20m Quest 3 headsets in 2024.
If the Quest 3 headset sells 25 million units between the last quarter of 2023 & all of 2024, and the price remains at $499. That means Meta's revenue will increase in the ballpark of 12.5 billion dollars (Counting 5 yearly quarters, the last quarter of 2023 + 4 quarters in 2024). Not including revenue from accessories & the Meta app store.
Rephrasing: Meta had $116.8 billion in revenue in 2022. $65 billion from the Facebook app, and probably 4 billion of that was from Quest 2 hardware sales (not including software sales). I'm predicting Quest 3 will sell twice as well as Quest 2, meaning 20 million units, at the higher $499 price point, given the total value proposition, this will mean an increase in Meta's total revenue for 2024 by at least $10 billion.
Considering that Meta purchased Oculus for 2 billion dollars, and they may make 10 billion or more on Quest 3 in 2024, it now seems like Mark Zuckerberg's investment in Virtual Reality was a financially sound decision!
What about Meta Reality labs operating losses, including research & development costs?
“Meta’s Reality Labs has now lost more than $21 billion since the beginning of last year”
Ten billion in revenue from hardware sales, in 2024, is still a good step forward, but that number does not cover all of the investment costs Meta has made in VR, AR, and AI research to date.
It may take Meta a lot longer than 1 year to recoop it’s investment costs & it’s ongoing operating expenses. We should think of Meta’s road to operating profitability as a ten year journey. Quest 3 is a great start, and a good sign for Meta’s future.
Well done team Meta!
PS: I'm looking forward to getting a black Darth Vader edition of Quest 3. When is that going to be released?