Earlier this week, Facebook bought Oculus VR for $2 billion. It sent shockwaves throughout the tech community, and raised the ire of many gamers. Many felt that Oculus VR represented The Future(TM) of gaming, and that this deal killed that future.
I’d like to argue the counterpoint, if you’ll indulge me. The Future(TM) that Oculus represents to many could not, and would not have happened without this deal.
Look first at the history of VR. We have something around twenty years of attempts at making VR, and every single one of them has failed. We can talk about how the graphics weren't ready, or the development support wasn't there, or the cost was exuberant, or what have you, but the truth is that the Oculus would most likely have died a slow, painful death due in large part to the fact that anytime anyone has tried to make VR before (Oculus included), they've been building solely for a video gaming market. And that is a surefire way to shoot yourself in the foot, because at that point you’re pretty much just making a gaming peripheral.
And that’s what the Oculus was, up until three days ago. A gaming peripheral. Gaming peripherals have a very long and colored history (hello, N64 Rumble Pack) that have done wonders for the landfill industry (rest in peace, Power Glove). Gaming peripherals have a near 99% failure rate at gaining any sort of lasting market impact. They appear, some people look and notice, and maybe it sticks around for a year before it crashes and burns.
The game industry is insular. It is vapid, fleeting, distracted oh-so-often by the shiniest piece of sparkle, and collapses under the weight of it’s own spackled aspirations. The Oculus Rift, for all it’s rave reviews and promises of The Future(TM), is a device constructed out of scrap and unwanted cellphone bits. It is, quite literally, garbage.
The Rift, as it was three days ago, would have been a really cool product that I would have bought on Day One and played the shit out of. It would have given us a version of The Future(TM) that would have allowed us to say, “hey, this is a step forward. Neat.” And then, as often happens with these things, it would have stalled. Stagnated. Oculus the company would have had no real way to raise the truly MASSIVE amounts of capital needed to make any sort of rapid technological improvements. Stuck in a rut of using garbage bits, the Oculus continues to lag heavily behind current technology. Other innovations are slow, because the company simply cannot afford to swing and miss. Our dream of VR becomes stuck in the mud once again.
But it doesn't have to be that way. The Future(TM) is a very real thing, and it’s much closer to us now than it was three days ago. And it’s all because of Facebook buying this company.
Look, everyone has concerns about Facebook, and I do too. I’m not really a huge fan. So let’s address some of those concerns real quick.
People say they’re worried about Facebook plastering the Oculus with ads. A rather logical fear, given Facebook’s entire profit model is based off of ad revenue. The Oculus is, functionally, a replacement for a monitor or television screen. Monitors don’t have ads, the content inside them does. There will absolutely be ads and product placement within the Oculus. 100% of them will take place within games and programs being displayed there. It will be done by the content programmer’s design, rather than Facebook’s interference. Facebook cannot force ads to be beamed into the Oculus any more than Samsung can force ads onto your Galaxy S4.
People say they’re worried Facebook will step in and start micromanaging Oculus, or tell them what they can or can’t work on. This fear flies completely in the face of Facebook’s two largest purchases in the past, Instagram and WhatsApp. When FB bought those companies, they took an extremely hands-off approach to the situation. “Hey, here’s some capital for you to use. Do you want our help recruiting new talent? Our recruiters will now scout possible new employees for you guys as well. Good luck!” And then Facebook let them be.
Instagram was a cool app that has now taken a massive leap forward after FB bought them. WhatsApp is now the second largest social networking app in the world (in fairness to WhatsApp, this was already true before being bought by Facebook). FB has not interfered with those companies in the slightest, and it stands to reason that they’re treating this acquisition the same way, given that they've come out and said “we will be treating Oculus in the same way we treat Instagram and WhatsApp.” Facebook is now a publicly traded company. They cannot lie about these things.
That’s not to say that Facebook buying Oculus will change nothing.
First, the money. Oculus was bought for ~$400M cash, and ~$1.6B in stock. That stock is primarily an incentive: do well, help our stock improve, and you directly reap in the profits for it, just as if you had been independently owned.
Having a larger company behind them to bankroll their endeavors is a huge boon for Oculus, too. With it, Oculus no longer has to build the Rift with garbage pieces. All of a sudden, they have the massive amounts of capital needed to set up direct pipelines for quality parts. They have the capital needed to be able to freely innovate and take bigger risks with future models. They have the capital needed to even ask parts makers to make custom parts exclusively for them.
Facebook has also taken a page out of the Google playbook, and it’s a really great one. The King Of Search has sold all of their hardware pretty much at cost. The Nexus family of tablets, the Google-branded smart phone, Google Glass… they’re all sold at, or close to, cost. Facebook has said that they intend to do the same with the Oculus, which means that the Oculus can have all those nicer, shiner, fancier parts without an increase in price. Three days ago, Oculus Rifts had to be sold for profit. That is no longer the case.
All of this, however, misses the biggest thing. The #1 game changer. The reason that instead of getting The Future Of Gaming(TM), we are now getting The Future(TM).
Facebook bought Oculus.
This is the turning point. Think about it for a second. Facebook is not a gaming company. Their flagship platform does allow for some browser-based gaming, but Facebook is not a gaming company. Facebook is, however, a major power in tech. So major of a power, in fact, that their purchases and plans ripple across the rest of the world.
This purchase hit the gaming web like a tidal wave. It hit the tech web like a rogue wave. But it goes beyond the traditional realms of VR, too. The NYT ran a story about the buyout a day ago. Think about that for a second. A virtual reality headset that’s not even available for consumer purchase yet somehow made it onto the the business section of the most widely read and respected newspaper in the country. TIME ran a piece about it earlier today. The Wall Street Journal has started covering this.
Warren Buffet knows this exists now. The CEOs and Boards of Comcast (owners of NBC), Disney (owners of ABC and ESPN), Newscorp (owners of Fox), and all the others are now aware of the Oculus Rift. Not only that, but they’re suddenly thinking “wait, one of the fastest growing and most powerful companies in the world just spent $2 Billion on this company? And they don’t even have a product yet?!”
This changes everything.
I was excited about The Future Of Gaming(TM). If you had asked me three days ago, I would have told you that the Oculus was an awesome product that I was really interested in, especially since the game designer I respect the most in the world is directly developing for it. I couldn't wait to load up a Jade Empire or Baldur’s Gate or Mass Effect-esque RPG with an Oculus Rift strapped to my head. I've dreamed about that since I was a kid.
But the VR I dreamed about was more than that. The VR I dreamed about could take me anywhere. Three days ago, I knew that the Oculus Rift wasn't going to give me The Future(TM) that I dreamed about as a child, or at least not for quite a while. Digital homes where I could have house parties with all my closest friends, regardless of our location? Front row seats at the 50 yard line of a Mizzou football game? Felix Baumgartner’s crazy Earth-shattering Fall From Heaven, live as it happened? All of that was still a pipe dream.
That was three days ago. Today, that future seems so much more real. Facebook has the muscle, the clout, and the prestige to make it happen. Zuckerberg is a brilliantly insightful person, keenly aware of what you can do with technology, and how the landscape of the industry is shifting.
He’s said as much. In the press release announcing Facebook’s buyout, he talked about using the Oculus Rift to put you at live sporting events. It’s a dream of his just as it’s a dream of mine. From what I understand, Zuckerberg is a pretty big F1 fan. I bet he’s dreaming of the day he gets to sit in the cockpit of Lewis Hamilton’s car as he goes screaming through those corners at Monza.
I share a very similar dream: the day I get to ride along Jorge Lorenzo’s M1 Yamaha as he goes twisting and turning around the holy Cathedral of motorcycle racing, Assen. That dream, to me, is worth the (rather unrealistic) risk of all those fears we expressed earlier.
All the rest of the VR tech will come much sooner now, too. If the Oculus becomes a device people use at home beyond gaming, we’ll start seeing the shift. Television and movies filmed specifically for VR. Haptic feedback suits. Omnidirectional treadmills.
Mark Zuckerberg just did what is probably one of the most important things in the recent history of tech. He made the very idea of Virtual Reality credible and respectable.
Now, all we have to do is wait.