Can Facebook Dominate VR In 2020?

Facebook (NASDAQ:FB) and its subsidiary Oculus have been the talk of the VR industry for most of the past few years. But the reality is that it's far from the leader in VR headsets sold. That title belongs to Sony (NYSE:SNE), whose PSVR has sold over 5 million units.

Oculus took a big step toward catching up to Sony in 2019 with the launch of the Quest headset that untethers the headset from a computer. According to SuperData, 400,000 Oculus Quests were sold through the third quarter of 2019, and the device has been sold out for months, so it's possible sales got close to 1 million last year. But the device has a long way to go to catch up to Sony. Here's how Oculus and Facebook can dominate VR in 2020 and remain a hot tech stock.

Picking off the low-hanging fruit

Oculus's VR strategy has been laser-focused on the consumer market. Oculus Quest's $400 price point is made for consumers, the company bought Beat Games, maker of Beat Saber, in late 2019, and it's launching a social VR platform called Facebook Horizon in 2020. These moves lean into the early adopters of VR, and Quest's strong sales in its first six months on the market have indicated that strategy is successful.

What Oculus has bet on is the idea that consumers will begin using VR at home, which is yet to be proven on a broad basis. But most developers are disappointed in the growth in consumers using VR; dozens of developers have gone out of business in the last three years or had to restructure because consumers didn't adopt VR as quickly as expected. But there is one market that is outperforming expectations, and it's something Oculus needs to pay attention to.

The value in enterprise

The fastest-growing segment of the VR market today is enterprise. According to SuperData, VR headset revenue from consumers is expected to grow 16% in 2019, while enterprise sales are expected to grow 69%.

Despite the fact that Oculus isn't focused on enterprise, it's getting large enterprise customers almost by default. For example, Walmart bought 17,000 Oculus Go headsets in 2018 to use as part of training for employees. But Oculus still doesn't have an enterprise platform that can manage dozens of devices at once or a seamless platform for distributing enterprise content.

HTC Corporation has been more focused on the enterprise market, and its Vive Pro is preferred to Oculus Rift products. But Vive hasn't been able to make an untethered device that has caught on in the market.

If Oculus can build enterprise solutions that the market likes, it could take the lead in enterprise over HTC in addition to the consumer market.

Facebook is betting big on VR

VR is a heavy focus for Facebook in 2020, and the company has set a goal of 1 billion people in headsets long-term. Those are lofty goals; if the company can develop the right enterprise solutions and get more headsets in customers' hands, 2020 could be a big year for the company, and it could finally take the No.1 market-share position from Sony.

This article originally appeared in the Motley Fool.

Travis Hoium has no position in any of the stocks mentioned and owns a small VR startup. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.