Gen1 is way overpriced. Cost of production is less than half of what either HTC, or Oculus is charging. Their raking in the money right now. More competition is desirable.
I don't know what the production costs were, but i'm sure they are less now. But still, they have to pay for all that R&D out of the markup. Even if they sold them for 100$ they'd still be losing money for years to come.