With PC sales in virtual freefall and mobile devices hitting maturity in most developed markets, Facebook’s very future as social media’s bellwether is at risk as the platforms on which it has traditionally dominated begin to lose steam. The Oculus Rift VR 3D headset could reshape how Facebook users interact with the service – and each other.
As Apple and Google have already proven with their iOS and Android ecosystems, those who control the platform also control their own destiny, and if Facebook doesn’t stake its claim early on with high-dollar, high-risk acquisitions, it risks being outflanked either by niche-killing innovators on the lower end and Apple, Google, Sony and Microsoft on the upper end.
Another big bet
The Oculus acquisition follows last month’s blockbuster $19 billion WhatsApp buyout, and while $2 billion is hardly pocket change, the relatively small purchase price this time out reflects the fact that Oculus hasn’t yet delivered its first finished product to consumers. Unlike WhatsApp, whose 450 million monthly active users at the time of the deal somewhat justified the eye-popping asking price, Oculus has 75,000 pre-orders for its headset, and is expected to begin shipping product later this year or early 2015.
The buzz surrounding Oculus VR began with a Kickstarter campaign in 2012 that raised $2.4 million – well above its modest $250,000 target – and spiked after successful demos at E3 last June and CES in January. Two rounds of venture funding last year raised an additional $16 million and $75 million, respectively.
But turning Facebook into a gaming mecca is hardly Zuckerberg’s goal. In a Facebook post announcing the deal, he said while Facebook has no plans to change Oculus VR’s current plans to finish what it started, gaming is “just the start.”
“After games, we're going to make Oculus a platform for many other experiences,” he wrote. “Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face – just by putting on goggles in your home.”
Zuckerberg called it a “new communication platform” that will allow users to share not only moments, but “entire experiences and adventures” as well, and said the company would work with developers and partners to build new uses.
“One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people,” he said.
Given Zuckerberg’s track record, it’s difficult to bet against him. But to get from where Oculus is now to where Zuckerberg says it needs to go – namely finish and ship the first product, build a larger, beyond-gaming ecosystem, bring developers on-board with a competitive monetization framework and related software tools – is a monumental, multi-year process.
Facebook will also need to quell some early opposition to the deal. Minecraft creator Markus Persson immediately halted development on a Facebook port of the popular game, while Kickstarter supporters expressed their disappointment online.
Sitting in the cross-hairs
Then there’s Google, whose Google Glass project has been gaining momentum. While still admittedly a niche offering, the just-announced deal with Ray-Ban and Oakley sunglass maker Luxottica is the clearest sign yet of Google’s efforts to drive this technology mainstream.
While Google’s augmented reality baseline doesn’t perfectly align with Oculus’s virtual reality aspirations, there’s enough overlap between the two markets and technologies that Facebook will soon be competing head-to-head with the search giant. Taking on Google’s and Apple’s established mobile ecosystems and Microsoft’s and Sony’s mature gaming franchises ensures this will be a complex, expensive and long process. Sony’s just-unveiled Project Morpheus VR headset for PS4 only adds to Facebook’s challenge.
Will it work? It’s too early to tell right now. But publicly-traded Facebook is now making sequential, multi-billion-dollar bets, and investor patience isn't infinite.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. firstname.lastname@example.org