The Future of VR

Posted on by lhl

I’ve been pretty excited about the future of VR for the past few months (I’ve been gathering notes here). I was an original DK1 Kickstarter backer and have been following Oculus’ growth and development pretty closely lately. While an eventual acquisition was always a possibility (after a $90M B round at the end of last year), today’s announcement of a $2B Facebook acquisition came as a bit of a surprise, if only for the timing.

You can read Palmer Luckey’s announcement on the Oculus sub-Reddit, which doesn’t inspire much confidence, or Palmer’s comment responses, which are is a little more interesting. cliffyb and tycho have written interesting counterpoints/rebuttals to some of the knee-jerk responses.

Notch (Minecraft) has written a pretty insightful commentary, as has Max Temkin (Cards Against Humanity), which do a good job of summing up some of the unease/issues, particularly among enthusiasts and developers, are experiencing. cliffyb wrote an interesting counterpoint/rebuttal.

Rather than write something cogent and expressive, I’ll just collect some thoughts:

  • From Facebook’s perspective, buying Oculus right now for $2B is a steal. As Chris Dixon tweeted, it’s the equivalent of Google’s investment in Android. It’s quite clear that VR is likely the next big computing platform. Honestly, it’s about time Facebook got some ambition about the future. (Google’s been making everyone besides Musk look pretty shortsighted) What’s unclear right now is what Oculus has to gain, especially when there are reports of not just other bidders (which probably would have been much worse for Oculus) but also that investors had offered Oculus more funding. It’s unclear whether “more” in this context means more than the FB sale, but assuming the same $2B valuation, Oculus should have been able to pick up at least another $200M. Beyond the exit price (which goes to investors and the team), the question is, what did FB offer Oculus in terms additional resources to make this worthwhile – $1B? $2B? The Oculus team certainly left money on the table, so the question really revolves around FB’s value add beyond the costs that all acquisitions entail. Hints are being dropped, but we’ll have to see what pans out.
  • Part of the cringing I have reading Palmer’s announcement, of course is how familiar it is. Heck, I remember writing one very much like it about 10 years ago. I don’t doubt its authenticity/everyone’s best intentions, but having seen the cycle play out many times, I do think that the Oculus team may underestimate what the loss of independence means. Obviously enthusiasts will find it hard to root for Facebook, and developers should be justly worried (terrified, really) about Facebook’s developer/platform track record and manifold conflicts of interest, but beyond that, even though Oculus has assembled a fantastic team (the best team of creative technologists in field, and possibly across all of tech), what is the appeal for the best and brightest to work at Facebook? (That being said, I’m sure there are many bright people working at Facebook that would be excited to work on the Rift) While autonomy has been promised, maintaining focus as a subdivision of a large, publicly traded tech company has its own pressures/constraints and maintaining focus and drive requires a huge and different type of commitment over the long term.
  • That all being said, people canceling their DK2 orders are being irrational. The current hardware is locked in. It’s awesome. There will be drivers available, and almost assuredly open alternatives will emerge if the worst happens. There are cross-platform APIs available, and while there’s a concerns with patents (if Facebook is serious about creating a new VR market, a commitment to FRAND licensing, open standards, and open source would do much to settle everyone’s nerves). As of right now, all the components for compelling VR are known/available. Future developments like virtual retinal displays, foveated rendering, inside-out tracking are open to whomever has the resources, vision, and willingness to invest.
  • There’s no question that Facebook, Google, et al will want in on the Metaverse. Owning Oculus will give FB a big advantage and all but guarantees a seat at the table (make no mistake, this is the endgame), but I think everyone’s smart enough to realize that a walled garden will end up leading to AOL, not the Internet. No one wants the former (sorry, Shingy 😉 and there’s a lot more money to be made with the latter if there’s enough patience/vision.

Having slept on it, I think a lot of the knee-jerk reaction has merely been about the perceived “cash out”, but also that it feels a bit like giving up before actually taking a shot. While Palmer mentions partnership multiple times, at the end of the day, it’s an acquisition, which carries a lot of existential and practical baggage (and pitfalls) related to autonomy/agency/execution. Here’s hoping there’s enough momentum to carry things through.

Some links: