FB moves to own the next platform with Oculus Rift

Facebook recently acquired the virtual reality (VR) pioneer, Oculus Rift, for $2 Billion. The obvious question is how does this fit into the strategy of FB? FB is now moving beyond just being a social network to being a conglomerate that operates in multiple markets and has multiple revenue streams. For that to happen, it has to bet on the next thing and it might very well be VR.

Here is how I think it will play out:

• Oculus Rift (OR) stays a separate brand for the foreseeable future.
• With the cash, Oculus develops proprietary hardware. (I think the designs are already there. Implementation needed large capital that they now have)
• Simultaneously, capital is used to develop content (mostly gaming) that showcase the abilities of VR.
• This is announced publicly to win back the trust of the indie developer community.
• An amazing consumer version is launched at an attractive price point that has games at launch. (Similar to the PS4 having exclusive content on launch)
• FB uses its scale and distribution to push more ORs into the market.
• Good reviews and attractive price point attracts the early adopters – gaming community to OR. More revenues for FB and more install base of ORs.
• Enthusiasts develop apps for a niche audience in other fields. (Think app development for Google glass)
• A new way to experience FB is one of the many apps
• More updates and newer hardware push OR further into the mainstream (“You buy it for gaming, i buy it for video conferences”)
• Travel, Education and Media (Films) are the secondary sectors to embrace VR
• This creates network effects and it starts becoming the platform of choice to develop VR apps. (In today’s terms, “If I had resources to develop an app for only one platform, I would do it on iOS)
• A marketplace is created on the new platform and FB might take a cut of every app sold.
• FB goes back to the drawing board to create a new kind social experience in VR that captures the imagination of the next gen. (Ads might be limited to only this)
• Owning a VR set (mostly OR) becomes as normal as owning a smartphone.
• FB, just like Apple, decides to own the entire stack to provide a much better experience to end users. Blue colored FB VR stores anyone?

All of this depends on whether VR is the next big thing. If it is true, this might go down as a genius move from Zuck. This acquisition is quite similar to Google acquiring Android and owning the “next” platform – mobile. Google accelerated the development and distribution of Android 100x and it now dominates the mobile market. We truly live in fascinating times.

Originally published at anupgosavi.com.