Market Analysis

Facebook launches subscription service to boost its virtual reality business

Facebook’s lesser-known virtual reality business is launching a subscription service, which could make it the ‘App Store’ of VR.

Ever heard the phrase, “reality can be whatever you want it to be”? 

Well, Facebook’s (NASDAQ: FB) reality could soon be that of a VR kingpin.

I’m intrigued…

For years, VR was one of those things that we all expected to be prevalent in everyday life by now, but it hasn’t quite panned out — like hover cars, or a civilized conversation on FinTwit.

However, the industry has taken great strides of late, and at the forefront of it all has been Facebook — or rather, its subsidiary, Oculus. Oculus and the developers on its platform have been riding the success of the company’s recently released Quest 2 headset, which has already outsold every other Oculus headset sold to date. 

Now, Facebook wants to make recurring revenue from that success. Subscription pricing is coming to the Oculus Store, giving VR developers another way to monetize content on Facebook’s Oculus Quest headset. Developers will be allowed to add premium subscriptions to paid or free apps, with Facebook presumably taking a substantial cut, much like how Apple charges App Store fees — ironic considering that this is an existing point of contention between the two firms.

It’s early days yet with details yet to be confirmed, but the move signals that Facebook believes there is enough loyalty in the industry to justify subscriptions, just 5 years after it shipped its first headset.

Analysts estimate that the global VR market will grow at a compound annual growth rate of 18.0% from 2021 to reach $70 billion by 2028. With Apple’s App Store revenue for 2020 coming in at an estimated $65 billion and increasing by the year, could Facebook build its own App Store-like empire in a virtual industry?

Let’s wait and see…

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Jamie Adams
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.