Facebook Gets Into the Virtual Reality Biz… Whatever that Biz Might Be

A Facebook/Oculus VR logo?

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A Facebook/Oculus VR logo?

As reported here, the Oculus Rift DK2 was all the buzz at last week’s Games Developers Conference in San Francisco. The DK2 is the gen2 model of the Oculus Rift, a virtual reality headset developers’ kit aimed at opening the long-elusive VR frontier to the gaming community. The $300 Rift turned the nascent VR industry on its ear by shipping nearly 40,000 units since its introduction in January of 2013.

But 20 year-old Palmer Luckey — the man behind the Rift’s meteoric success and the founder of Irvine, CA-based Oculus VR – followed his previous week’s success with the equally impressive announcement last Tuesday of Oculus VR’s $2 billion acquisition by Facebook.

Facebook founder and CEO Mark Zuckerberg said in the press release, “Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow. Oculus has the chance to create the most social platform ever, and change the way we work, play, and communicate.”

Brendan Iribe, Oculus CEO said, “We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world. We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology, that enables the world to experience the impossible, and it’s only just the beginning.”

The release describes Oculus VR as “the leader in immersive virtual reality technology” and the Rift as providing “an immersive, stereoscopic 3D view with an ultra-wide field of view and low latency head tracking that lets (the user) look around naturally in 360 degrees.” The statement claims Rift orders to-date of “more than 75,000”.

In a Tuesday Oculus blog post, Luckey and his team say they first met with Zuckerberg months earlier. The post admits the two companies’ alignment, “might not seem obvious”, but says Oculus “…believe(s) communication drives new platforms; we want to contribute to a more open, connected world and we both see virtual reality as the next step.”

The deal includes $400 million in cash and 23.1 million shares of Facebook common stock, valued at $1.6 billion.

The news shook the entertainment world, with Andrew Wallenstein, Editor-in-Chief of digital news for film industry trade outlet Variety, opining, “While Cinemacon-ites grapple with how best to keep people coming to movie theaters, Oculus Rift will be part of the first wave of innovation capable of bringing an incredible visual environment to people wherever they choose. But this probably won’t require people congregating in theaters for an optimal experience the way 3D does.”

Facebook only reinforced Wallenstein’s and other’s anxieties, saying, “…several industries are already experimenting with the technology, and Facebook plans to extend Oculus’ existing advantage in gaming to new verticals, including communications, media and entertainment, education and other areas.”

Palmer Luckey developed the Rift prototype in his garage. The latest version, the DK2 unveiled last week, is based largely on existing cell phone hardware – a characteristic that makes it easy to mass-produce and accounts for its low price. Seed money for Oculus VR came from a $2.4+ million Kickstarter campaign – wildly surpassing the initial goal of $250K — followed by $16 million in Silicon Valley investment.

But not everyone who helped Luckey get his start are happy with the news of the deal, per the following not-atypical comments on the Oculus Kickstarter page:

Mathew Stephens: “Douchebag Oculus. Raises $2.5 million on Kickstarter. Immediately sells out for $2 billion. To Facebook. I want to retract all positive statements I ever made about this project.”
DExUS: “Facebook is something I hate from the bottom of my heart (never joined it) .. the news totally ruined my day and I’m thinking of canceling my pre-order.”
ben: “The best minds of my generation are thinking about how to make people click ads. That sucks.”

The Kickstarter opinions are divided though, with at least as many reflecting excitement that the deal will inject capital needed to overcome technological hurdles that keep the DK2 from reaching mass-market potential:

Vyfwonkel: “Congratulations Oculus! …even if Facebook manages to force Oculus to turn it into a blue headset with Like buttons on the side, VR technology on the whole will benefit.”
Stephen Jones: “We want VR to be huge and this will ensure it with all the money and the hype around this sale. Facebook are not the devil, they are a company trying to make money. I for one am proud to have backed this and other VR related projects.”
Cratesmith: “I’m happy for them to keep my money. People don’t like facebook (hell I don’t really like facebook) but the other businesses facebook has bought in the past haven’t changed one bit…I hope everyone can stop and think about this in a non-emotional way.”

More significant to Palmer Luckey’s initial goal of positioning the Rift as a must-have gamers’ device, Minecraft creator Markus “Notch” Persson Tweeted on Tuesday that the deal derailed his interest in collaborating with Oculus or their new parent company. Says Persson, “We were in talks about bringing a version of Minecraft to Oculus. I just cancelled that deal. Facebook creeps me out.” Persson later expounded in a blog post,”VR is not bad for social. In fact, I think social could become one of the biggest applications of VR. Being able to sit in a virtual living room and see your friend’s avatar? Business meetings? Virtual cinemas where you feel like you’re actually watching the movie with your friend who is seven time zones away? But I don’t want to work with social, I want to work with games.”

So what’s next for Oculus VR? Will the target marker for the Rift – and with it, VR – swing from one industry to another? Has Palmer Luckey abandoned his core supporters? Only time will tell.

But given his recent record, perhaps the answer will come from Palmer Luckey next week. Maybe the question to ask is if Luckey’s a hockey fan. If so, he might just pull off a hat-trick.