Oculus VR Joins Facebook. Why?
Earlier this week, Oculus VR founder Palmer Luckey took to Reddit to defend the sale of his company to Facebook for $2B. Oculus VR is mainly known for a product called Rift.
If you don’t know what Rift is, it’s essentially the most promising next-generation thing for gaming and interactive digital experiences. It’s the virtual reality (VR) goggles we’ve all seen in movies, but haven’t even sniffed here in the real world. TIME magazine has a great rundown on what it is and why its potential is so great.
Rift has many people excited. The early Kickstarter campaign was crazy successful, and the buzz that has been generated since then has been fantastic – especially as the hardware continued to iterate and improve.
But, sentiment quickly turned overwhelmingly negative after the deal was announced, so much so that Notch (the creator of the uber-popular Minecraft) won’t work with Facebook because “it creeps him out,” and Kickstarters are demanding refunds. It’s safe to say that Facebook is the LAST company Oculus backers wanted to see land the deal. The Reddit thread in which Luckey defended his company’s sale quickly filled with overwhelmingly negative comments.
I have two semi-disjointed thoughts about the deal.
ONE
At this point, are you stunned that Oculus, quite literally the future of gaming and an immersive VR device the world has never seen before, goes to Facebook for $2B while WhatsApp, a cross-platform messaging app, commands $19B from Facebook?
Well, don’t be. Stunned, that is. Facebook took a leap of faith here: it spent $2B (cash and stock combined) for a two-year old hardware company, led by a 21 year old, that has zero successful commercial products on the market. In other words, Facebook sees potential in Oculus VR, whereas in WhatsApp it sees real lifeblood: an ocean of active, engaged users.
TWO
Why did Zuckerberg do this?
Oculus Rift isn’t a direct tie-in to Facebook’s social platform. Rift doesn’t seem positioned to pose a threat to Facebook in any way, not like Google does (for instance).
I think Zuckerberg did this becaue he sees immersive VR headsets as the next major computing platform. He could very well be right. Rift doesn’t iterate on anything currently existing – it’s disruptive. So disruptive, in fact, that Sony has a project very similar to Rift called Project Morpheus. If we’re talking about the next thing in computing, we could pretty easily say it could be the next iPhone or iPad. Heck, if it misses that mark, it could still be the next Xbox or Playstation, which do quite well as standalone businesses, thank you very much. Here’s Zuck himself:
“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” Zuckerberg said in a press conference. “Oculus has the chance to create the most social platform ever and change the way we work, play and communicate.”
Mainly, I wonder if Zuck did this because the terms are good for Facebook. He’s only spending $400M in cash, the rest of the deal using 23.1 million shares. If Zuck is right and this thing turns out to be the next major platform, he scored a tremendous win. If not, well, he only spent $400M cash, so he gets to feel the heat of trying to predict a trend and getting it wrong.
I certainly didn’t see this coming. The optimist in me says that Zuck sees a huge opportunity to expand Facebook’s brand into what could be the Next Major Thing – he could literally change the way we play and interact. The pessimist, meanwhile, sees either a platform that will be stillborn because major developers don’t trust Facebook, or, worse, a VR platform whose creepiness blows through the roof because Facebook uses it as data-gathering engine for social data and tie-ins.
Regardless, leaders take chances and do things that don’t have a clear endgame, and Zuck certainly did that this week. I’m excited to see where this goes.
