Why You Should Care That Facebook Spent $2 Billion To Buy Oculus

oculus faceFacebook has been all over the news today, and not just because voters here at Consumerist think they’re terrible. It all has to do with the online behemoth’s latest, surprising acquisition: a virtual reality company called Oculus.

The Oculus Rift has, until recently, been a product that only a fairly narrow niche of folks have known about. Video game and technology enthusiasts have been following the development of the latest in immersive gogglewear since 2012, when a crowdfunding campaign looking for $250,000 to work on developer kit prototypes ended up with close to ten times that amount, over $2.4 million from over 9500 enthusiastic backers.

Then last night, Facebook announced their intention to buy Oculus for a whopping $2 billion. For some context, that’s double what Facebook paid for Instagram two years ago, though a fraction of the $19 billion that WhatsApp just went for last month. But a photo site and a messaging service make sense as part of Facebook’s universe: the site’s entire reason for being is to connect people so they can talk and gawk.

But a virtual reality headset that hasn’t even shipped a consumer model yet? That’s an acquisition that’s created a lot more head-scratching than nodding along. If stock prices are any guideline, Facebook stockholders aren’t so sure about this at all. Meanwhile, those dedicated fans who have been with Oculus since 2012 are a whole lot less than pleased with this new direction for the company they backed. And pretty much everyone has questions.

Why does Facebook suddenly care about virtual reality?
The Oculus Rift has been designed and marketed to date as a gaming device. Sure, people play Facebook games… but that’s not really why the social behemoth made this move, industry experts and watchers are saying.

Facebook even said as much, in their press release: they have “plans to extend Oculus’ existing advantage in gaming to new verticals, including communications, media and entertainment, education and other areas.” Given “these broad potential applications,” Facebook said, “virtual reality technology is a strong candidate to emerge as the next social and communications platform.”

If Oculus tech does allow Facebook users in disparate parts of the globe to have a reliable way to attend the same events in person in some way, that would indeed be a big deal. Imagine a huge headlining group — say, the leading boy band of 2020 — throwing an Oculus-only concert: millions of tweenagers logged in, paying to attend, from the safety of their own bedrooms. That kind of money could fill a Scrooge McDuck tower ten times over.

But the future may not be so bright. Facebook, after all, has a decidedly spotty record with its users and with developers who create games and apps for the site. One of the more critical experts is Raph Koster, a game designer who has has been making games for over 20 years and writing about games, and how and why people play them, for over a decade. Koster has worked on several virtual worlds and Facebook titles over the course of his career. In a blog post musing on Oculus’s sale, Koster observes that the business move is all about the future, and what directions the very existence of technology might go.

What VR tech can give Facebook, Koster argues, is presence. Social networks connect us in one way, but all the Google glasses and smartwatches in the world don’t really add up to a “you are here” feeling. Something like Oculus potentially can:

The virtue of Oculus lies in presence. A startling, unusual sort of presence. Immersion is nice, but presence is something else again. Presence is what makes Facebook feel like a conversation. Presence is what makes you hang out on World of Warcraft. Presence is what makes offices persist in the face of more than enough capability for remote work. Presence is why a video series can out-draw a text-based MOOC and presence is why live concerts can make more money than album sales.

Koster continues by saying that Facebook thrives on that: tracking when you were somewhere, and who you were with. Those connections and events, he says, are the core of Facebook’s business. And to Koster, the idea of Facebook having ownership over virtual versions of that is, well, a bit scary:

Facebook is laying its bet on people, instead of smart objects. It’s banking on the idea that doing things with one another online — the thing that has fueled it all this time — is going to keep being important. This is a play to own walking through Machu Picchu without leaving home, a play to own every classroom and every museum. This is a play to own what you do with other people.

Games will of course remain one of the applications, Koster says, “but Oculus, in the end, serves Facebook by becoming the interface to other people online.”

“I’d feel better about this if Facebook understood people, institutionally,” Koster adds, but “I’m never quite sure if they do.”

Okay, but why does a hardcore gaming tech startup care about Facebook?
The team behind the Oculus Rift is all but synonymous with competitive, guns-blazing gaming: chief tech officer and occasional mad genius John Carmack was one of the key creative minds that brought Doom and Quake into the world.

Virtual reality is perhaps the ultimate extension of the first-person shooter, bringing “you are here” to a whole new level. But in order to succeed, the Oculus Rift needs a broader market — a killer app that isn’t all about killing, argues Tap Repeatedly’s AJ Lange.

Lange, who tried a game demo on the Rift at the annual Game Developers Conference last week, left the demo thinking, “Well, Oculus is an interesting toy, but it’ll never really take off until someone finds some kind of non-game use for it.” Less than a week later, the Facebook acquisition news broke. The Facebook buyout is probably good news for Oculus, Lange argues, but the product still has a steep uphill road ahead if it’s going to succeed. And that challenge is its own legacy as a hardcore gaming device:

There’s a difference between the reason someone buys a device, and what their usage pattern with the device turns into. What matters here is a crossover between consumer perception of a device, and perception of themselves: ie, am I a consumer who buys this device?
So if I’m a gamer, then, heck yeah, I will buy Rift, because I want to be a fighter pilot in space.

If I’m a non-gamer (ie someone who doesn’t self-identify as a gamer) I’m not sure why I’d want to get Rift to do those non-gamer tasks. That’s the perception that Facebook is going to have to overcome if it wants to put these in more homes for non-gamer uses: Oculus’s legacy as a gaming device.

Lange draws a parallel between the perception and reality of smartphone game players and Xbox 360 owners: a woman who spends three hours a day playing games on her iPhone will still think of it primarily as a phone and will not identify herself as a gamer. Someone who buys an Xbox with the intention of playing games on it, meanwhile, but who mainly uses it for streaming Netflix six days a week is still more likely to identify with that “gamer” label. And that divide between perception and reality, between potential use and original design, could be the proverbial albatross around the Oculus Rift’s neck.

So what now?
Right now, the Oculus Rift and the future of virtual reality are still a big fat question mark. While the Rift has been shipping development kits to its Kickstarter backers for a while, to date there hasn’t been a consumer version of the product manufactured or shipped.

The New York Times reported that Facebook would sell the devices as Facebook-branded inside and out; Facebook has denied that claim. Meanwhile, many Kickstarter backers are ticked off at the company’s sale, feeling that Facebook isn’t at all what they signed up for.

That the big money is moving around — and $2 billion is indeed big money — means that someone is trying hard to make virtual reality into an actual reality. Will we all go tiptoeing through digital tulips with our Facebook buddies by next year? Doubtful. But five years out, it may be another story.