Facebook has been teasing us. While many of their recent acquisitions have been surprising, shocking is the only word adequately describing Facebook's 5 day whirlwind acquisition of Oculus, immersive virtual reality visionaries, for a now paltry sounding $2 billion.
For more than 30 years VR has been the dream burning in the heart of every science fiction fan. Now that this future might finally be here, Facebook’s ownage makes it seem like a wonderful and hopeful timeline has been choked off, killing the Metaverse before it even had a chance to begin.
For the many who voted for an open future with their Kickstarter dollars, there’s a deep and personal sense of betrayal, despite Facebook’s promise to leave Oculus alone. The intensity of the reaction is because Oculus matters to people. It's new, it's different, it creates a better future. It's important in a way sending messages or taking pictures never can be.
Let’s use Andy Baio as a sane example of the loyal opposition:
I can palpably feel the oxygen sucked out of the room. Infinite bright possibilities from indie game devs, quietly shelved.
Jigsus backs this up on reddit:
Within the last hour EVERY friend I know was developing a rift game has canceled. That's around 11 projects just gone.
So WTF? Why in this reality would Oculus sell to Facebook? At first blush it makes little sense. A more mismatched couple could hardly be created in a fantasy immersive 3D game.
Yet there's a reason and a method here that's not only about about a sweet payoff. When you look deeper at the Facebook deal it’s about Oculus' existential need to scale. And scale is something Facebook is very, very good at.
Let’s explore why this deal makes more sense for Oculus than it might first appear and the central role scalability plays in the decision making...
The rapidity of the deal makes one think it’s driven by fear. rjd picks up on this theme on the Oculus side:
The Sony morpheus system is already better than oculus feature wise, with better position tracking, and accessory tracking as well. And don't under estimate that, I've read some pretty strong "never again" comments from people using VR headsets and loosing grip of the controls and floundering and/or having to take the headset off to get the controls back into their grips again... even just moving your hand on the keyboard is apparently quite annoying. Essentially without backing they will loose all market capabilities and be relegated to experimental hardware and not a mass market device.
Time to market does seem to be an issue. Antonio Rodriguez, the general partner at Matrix who led the deal said “The Oculus guys have a clear roadmap. The only thing that I see changing is that Facebook will be able to help them get it to market sooner.”
There’s also fear on Facebook’s side. Facebook missed on mobile like Microsoft missed on the Internet and has had to spend a lot money getting back in the game.
This theme emerges out of a Facebook conference call about acquiring Oculus. It’s as exciting as you might think, but there’s some good stuff there.
Inventing the Future
After many billions spent on WhatsApp and Instagram, Facebook now feels strong in mobile and they are looking ahead. Mobile from a strategic position is the past. Not wanting to be the general that fights the last war, Facebook intends to invent the future, and they have the war chest to buy what they can’t invent.
But what is the future? A little card displayed in front of your eye? A little card displayed on a watch? A slightly larger or smaller screen?
Facebook's future was revealed in a near mystical experience made manifest by Mark Zuckerberg actually using Oculus Rift. There’s a knowing that only comes with experience and the experience of using Oculus Rift was all the knowing that was necessary to a lay a doom on Facebook’s future.
Facebook buying Oculus was a no-brainer. Oculus has all the good people and years of lead time, so Facebook couldn’t duplicate the effort even if they wanted to. If you want to know more about what Facebook is getting then read Why Virtual Reality is Hard by Michael Abrash, a developer at Valve Software. It details why VR so hard and the decades of technological developments that have made VR possible now.
The motivation for Oculus is less clear. It could be something as simple as money. Never count that out. But reading the comments from the various players makes this less likely in my mind.
Money as in loads of cash to invest in technology is often a reason to be acquired. Oculus Rift developer Palmer Luckey likes the deal for what it enables. He says “We have not gotten into all the details yet, but a lot of the news is coming. The key points:”
We can make custom hardware, not rely on the scraps of the mobile phone industry. That is insanely expensive, think hundreds of millions of dollars. More news soon.
We can afford to hire everyone we need, the best people that fit into our culture of excellence in all aspects.
We can make huge investments in content. More news soon.
These are all dimensions of scale. The conference call also mentions scaling marketing and other corporate functions. Oculus doesn't have to grow these now, it can just concentrate on making stuff.
But there’s more to it. Brendan Iribe, Oculus CEO, in that same conference call tells the story of the romance between Oculus and Facebook. Oculus started with games, but once the technology was actually experienced something unexpected happened, they started to realize how big social would be. Once you can truly feel you are actually present with another person and your brain feels convinced it’s real, something fundamentally changes, you get goosebumps. Which made them realize how big social and communication can be.
VR is about games, but it's more than games, much more. Think about how big something as simple as IM has become because it's at the heart of human interaction. This seems silly to many of us, it's too simple, but when you are at the heart of human interaction you are almost by definition in the modern world in the best position to profit. What if VR is the new best position to be in? We all just assume VR will happen. And it will. But the shape and makeup of VR is still wildly in play.
So if you want to focus on social do you rebuild all those social network from scratch? No, you work with the social leader, which is Facebook. If you are Oculus you just saved yourself years of work in what you consider a major market opportunity. Maybe there’s also a little fear that Sony will be better a games so the quicker the diversification into other markets the better?
Zuckerberg sees VR as the next social platform: "We're clearly not a hardware company. We're not gonna try to make a profit off of the devices long term. We view this as a software and services thing, where if we can make it so that this becomes a network where people can be communicating and buying things and virtual goods, and there might be advertising in the world, but we need to figure that out down the line."
Zuckerberg is making a long term bet on VR because of the potential payoff. VR is not just the next social platform, but the most social platform ever: “Virtual reality headsets might someday be used to enjoy a courtside seat at a basketball game, study in a classroom, consult with a doctor face-to-face or shop in a virtual store. Imagine sharing not just moments with friends online but entire experiences and adventures."
VR can be a new medium for connecting people in entirely new ways. This vision is shared by both Facebook and Oculus.
Nothing anyone who has spent a few minutes thinking about VR hasn't also thought of, but the proof is in making it happen. And making it happen is the problem. Oculus Rift is not a platform, it’s "just" a headset. Where does the rest of the platform come from?
It's About Scaling
John Carmack, superstar programmer at Oculus, hints in a couple tweets that Facebook’s great value is in how it will help scaling VR:
Tweet 1: I have a deep respect for the technical scale that FB operates at. The cyberspace we want for VR will be at this scale.
Tweet 2: For the record, I am coding right now, just like I was last week. I expect the FB deal will avoid several embarrassing scaling crisis for VR.
Note, he is saying cyberspace. Not a single player game. He’s thinking about the whole dream. A giant MMO as in the Metaverse from Snow Crash.
If you are going to have hundreds of millions of people living and interacting in a VR space, how do you make that happen? It doesn’t happen in Photoshop. It takes truly immense amounts of compute, network, management, and geographically distributed resources. It doesn’t happen quickly when building from scratch.
Who has all of this in spades? Facebook has the datacenters. Facebook has the fast hardware. Facebook has the fast networks. Facebook has the ability to manage it all. Facebook has the software. Most importantly Facebook has the ability to plan and build as much of it as needed. Very few others can make this claim. Certainly not a startup.
You can just imagine the Oculus team thinking about all this and wondering how the heck they are going to get it all done before the market window closes on them.
Following this line of thought...if you want to create cyberspace for real, don’t you want to go with the best way to get there the quickest? Isn’t it then worth it to work with Facebook? Especially if you think you've made sure you can keep it open?
People have a right to be bitter. Oculus may have complied with the letter of the law in their rapid rise from an open Kickstarter to a closed multi-billion dollar buyout, but they certainly have not lived up to the the spirit of the adventure they started.
But there’s a bigger picture here. A much bigger dream. One that will be pretty damn cool if it works out. Even if it’s riding on Facebook’s infrastructure.
Virtual Reality is going to change the world at notch.net
- Internal Facebook conference call about acquiring Oculus