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Facebook Purchases Oculus Rift: An Odd Match?
Posted on April 2nd 2014
During the second season of science fiction animated comedy Futurama, the characters log into a future version of the internet using a virtual reality headset. Able to walk around in an online world, represented by digitised avatar versions of themselves, one of the first things which the team encounters is a flock of aggressive adverts. These large, flapping banners fly at them from all sides and the characters are forced to fight them away.
Fourteen years ago, this might have seemed like a dry dig at the AOL-ised version of the then-internet. With the recent news that social media giant and purveyor of advertisements Facebook have bought virtual reality headset manufacturer Oculus Rift, however, it seems this $2 billion buyout has fulfilled the writers’ prophecy of a bleak future.
Oculus Rift purchase causes outrage.
The purchase has caused outrage. Oculus Rift was originally developed thanks to a Kickstarter campaign, with interested parties pledging their money to purchase a version of the headset which had not yet been developed. Hailed as one of the best examples of how to use customers’ interest and goodwill to get a company off the ground, many of those early investors feel betrayed by the sale of the company to one of the giants of the technology world. This is evident in swathes of cancelled pre-orders and the volume of vitriol on technology message boards and, ironically enough, social media.
But rather than focusing on what the outraged fans plan to do, what does Facebook have in store for this technology? As the first working version of an immersive virtual reality experience, Oculus Rift was originally designed by gamers for gamers. While this might seem far beyond the remit of a social media company, one does not simply spend a couple of billion dollars to annoy an online community.
Facebook jump on the wearable tech bandwagon?
One theory is that the key product developed by Oculus Rift holds little interest for Mark Zuckerberg’s corporation. Instead, their investment in a workable virtual reality system could be a parallel to rival corporation Google’s development of their Google Glass wearable tech. The idea of wearable technology designed to bring a digital world before our eyes is evident in both products, though they seem to approach the concept from different angles. While the product might be far from production, the patents and the research which Oculus Rift possesses could one day prove incredibly valuable.
Perhaps useful in this instance is a comparative tool. As a point of reference, Facebook’s purchase of both Instagram and Whatsapp for huge sums of money have been similarly maligned in the press. While these companies develop technologies which are more similar to Facebook’s core experience, they seem to provide little in the way of new technologies which the world’s largest social network does not already own. Rather than bringing the technology into their core products and integrating them entirely, both purchases have been allowed to exist as independent entities. Though it might be too soon to tell with Whatsapp, Instagram has seen a growth in users since the take over and has strengthened as a legitimate product in its own right. Perhaps then, the purchase of Oculus Rift is a similar means of diversifying a company’s portfolio and an interesting and potentially profitable way of spending some of the large amount of revenue which Facebook has generated.
A step too far for Facebook?
On hearing news of the purchase, many people’s thoughts immediately turned to a scenario something like that Futurama prediction from nearly fifteen years ago. A virtual reality version of Facebook. But would that really be the company’s ideal long term aim? Facebook has made a platform leap before: moving from web browsers towards a mobile experience has been a tricky transition, with the company having to redesign their platform to be used via the medium of touchscreen based apps. This leap is hard enough and many people still complain about the app's abilities. Making the leap towards a full on virtual reality Facebook experience might be better suited to a time when they have mastered the two dimensions they currently occupy. A third might be a step too far.
Will Facebook monetise Oculus Rift?
When it comes to monetisation, however, there could be a few ways in which Facebook could seek to profit. As well as licensing the patents the company possesses, and any future profits which might be generated by the successful and independent running of Oculus Rift, the key to the monetisation of the purchase might not lie in what Oculus Rift can do for Facebook, but rather, what Facebook can do for Oculus Rift. As a Kickstarter project which worked its way towards a working prototype, the Oculus Rift device represented a niche product promoted to a niche market. Those who believed in the project did so fervently and backed it with their own money. However, the $2 billion spent by Facebook opens up the product to a whole new audience. Without having to rely on that niche core any longer, the company now has a much greater financial clout. The development and the scales of economies can be backed with hard cash, rather than raised capital.
While the original backers of the campaign might feel betrayed (and they have every right to feel as such), Mark Zuckerberg has simply backed the company on a larger scale. Now, Oculus Rift has widened its market appeal and has unprecedented access to millions of potential customers. By the sheer act of purchase alone, the profile of the company and the product has been raised to national news. By kick starting the future of Oculus Rift with a huge purchase, Facebook could well have an incredibly profitable company on their hands rather than simply another tech start up.
One potential area that really gets me excited is the potential for in game ads. We already have Re-marketing and Pay Per Click advertising on Facebook but what if whilst playing the latest blockbuster game you see an in game advert on a billboard that relates to a website? How about a sponsored Facebook post appearing in game? The possibilities are endless but one things for sure, we know Facebook need the ad revenue so whilst I doubt Oculus Rift will be monetised in the short term, the long term is a different story.