Oculus will sell 5 million Rift headsets in 2016, will be sold at cost

According to analyst firm Credit Suisse, Oculus will sell as many 5 million Rift headsets next year, with analyst adding that it doesn't expect the Facebook-owned VR startup to make any money on the first batch of headsets.

Barron's picked up Credit Suisse's report, with it reiterating that it is making the estimate of the sales projection without official information, based on the $350 estimate. Credit Suisse wrote: "We expect Facebook to price the headsets at cost in an attempt to drive initial consumer adoption - with the expectation that the company plans to monetize the devices overtime via associated software revenue. Note that our current projections do not contemplate any software revenue, although at launch Oculus will be offering a number of made-for-VR games and video content from partnering developers and content owners - which include Sega, Lionsgate, Fox, Twitch, Hulu, and Vimeo".

The firm added: "Net-net, we expect Facebook will grow hardware revenue generated from Oculus at a 4 percent five-year CAGR from $2.1 billion in FY16 to $2.6 billion in FY21. However, given our assumption that Facebook will once-again demonstrate a willingness to forgo near-term monetization in return for increased product adoption, we are modeling an initial negative gross profit impact from the initiative - with Oculus gross margins reaching breakeven by 2021 and contributing ~$50 million in gross profit by FY22".