Oculus and Facebook Analysis

[Tbone]

So I've had a day to process the news that Facebook has acquired Oculus. My first reaction was as if I had been punched in the gut. Everything I had been following and hoping for was now in flux. What did it mean? The outcry of the community was pretty crazy. I spent all last night trying to piece together the bigger story, and so now, a little over 24 hours later, I figured I would share.

So what does it all mean? Well, Facebook bought Oculus for $2 billion. That's a lot. All those investors made a shit ton, so mission accomplished. But Oculus was being courted by a LOT of companies. Why Facebook? Well, first, they probably offered the best deal. But what does this entail?

Facebook is not a hardware company and wasn't in the space for VR, so how does this make any sense? First of all, Oculus did not want to sell to another company like Sony or Microsoft. If they did, their tech would simply be stripped down and implemented into whatever project those guys were working on. The Rift would no longer exist. Instead, Oculus now has the funding of its competitors. Facebook is infusing Oculus with a lot of cash and saying "do what you were going to do". Oculus still exists as a company - just a different person is writing the paycheck.

Facebook's other big buys (Instagram and WhatsApp) still operate as independent companies, at least from the outside. Think of all the companies Disney owns yet you don't associate with Disney. Even though Disney owns companies like ESPN and Marvel, Mickey Mouse doesn't show up at the football games. For now, that's Facebook's strategy - a hands off approach. Let Oculus build the best VR headset money and talent can make and let them get their gaming infrastructure going.

For Oculus, this is the difference between making sacrifices and going all out. They describe it as having two road maps - the "realistic" one and the "impossible" one. Nate says the "impossible" one just became the "very likely" one. Oculus says they have a few more announcements in the coming weeks and months that will make this acquisition make a bit more sense. Essentially, they get to create their own custom hardware just how they want it (and just how VR needs it). Before, they were going to make the best headset they could afford and hope it sold well enough that they had enough money to make the SECOND consumer Rift everything it should be. Now they can skip a step.

For VR, this means competition just got amplified x100. Sony isn't competing with Oculus anymore. Their competing with Oculus+uberfacebookmoney. They'll have to step up their game. This means that VR devices are going to be insanely good AND insanely cheap. Oculus and Facebook have said they plan to sell the Rift headset AT COST. Wait, at cost? How are they going to make any money?

Here's what it boils down to. Facebook didn't buy the Rift headset. Facebook bought the rights to the Metaverse. And this is where people bitch about pop-up ads and privacy and all that. Valid, but the Rift is still a PC peripheral and Facebook is smart enough not to purposely piss off a whole new market of people. If Facebook tries to inject itself directly into Oculus Share or whatever social Metaverse is created, people will just circumvent it. The PC is an open source device. If Facebook does try some stupid software, it'll just end up being that stupid bloatware that you uninstall from your new Dell.

So Facebook isn't rebranding Oculus, and day-to-day there wouldn't even be a hint that Facebook is involved (I bet a lot of people will forget). Yes, there may be an optional "login with Facebook" in the Oculus ecosystem, but there's no way they'll make it mandatory (Palmer says so). Facebook does plan to make money by virtual goods and, eventually, advertising. Before you freak out, this was Oculus' plan all along. Oculus wanted to give the hardware away for free so that everyone could have VR and then make their money via the software and perhaps subscriptions. This allows Oculus to do this ahead of schedule - only the profit goes to Facebook instead of Oculus.

The concern I do have is that attention may be drawn away from gaming. Facebook has no plans to initially distract Oculus from focusing on being a gaming headset, but that could change down the line. I purposely don't believe virtual reality will become a Metaverse (I believe the WWW is already the Metaverse and that convenience trumps immersion when it comes to information). Oculus needs to focus on gaming and media, as that's what virtual reality excels at. I'm excited for the social aspect as well, but I just hope they don't spend too much time trying to make a virtual Facebook that the other areas suffer. In this regard, I would rather Oculus had merged with Valve and therefore used Steam as a platform.

BUT since Oculus isn't on a gaming platform, it will open them up to a much bigger audience, which again spells success for VR. There's no stopping the momentum now and someone is going to break through and become THE new platform of the future. Yes, I know no one wants Facebook to be in control of this new platform, but welcome to reality. Datamining, privacy, ads - it's an issue with EVERY company. If not Facebook, then Oculus, or Sony, or Microsoft. If anything, Facebook will be a bit more sensitive with it since they do have a reputation.

Because of this acquisition, the Oculus Rift is going to be some AMAZING hardware beyond what Oculus thought they'd be able to design. This will accelerate competition in the VR space and we're going to see VR evolve very rapidly. That's very exciting. I think it will also broaden the scope of virtual reality beyond gaming, and so we'll see a Netflix VR, etc. much quicker. I would have rather seen Oculus become this giant company all on their own, but if would have taken a while. My hope is that this accelerates Oculus' growth and they do become that giant full of the same talented, passionate people and that "Facebook" just ends up being this forgotten partner that collects the paycheck. No doubt Facebook will try to shape social VR, but they didn't do so bad with Facebook itself. Most game developers are "cautiously optimistic" that this will work out, so I don't think content will be as big an issue as I initially suspected.

The hardware will be great. The software will be great. And I can't wait to see what cool things advertisements can do in virtual reality! =P

[likwidtek]

I agree it'll be all fine if it's still just a PC peripheral like a monitor.  That isn't the end game though.  They are aiming for a standalone device.  Meaning, down the road we look forward to the OS being owned by facebook.  Which means LOTS more data mining and ad serving.

Granted, this would be no different than if Google purchased them and it ran Android.  The purpose of Android is to get ads to as many people as possible and scrape data from all of those users.

We just don't trust Facebook. 

I'm sure it'll still be a fun experience and a great piece of hardware.  I just hope to god they keep it as open as the PC.