Can Oculus Rift survive Facebook?

Facebook’s acquisition of virtual reality headset maker Oculus VR for $US2 billion last week ($US400 million in cash and 23.1 million shares) immediately raised furore, especially from those who had backed the company in its early days.

The core community of Oculus, many of whom invested their own cash into the company via crowdfunding platform Kickstarter, took to Twitter, Reddit and various online forums to vent their frustrations over the buyout.

Prior to the announcement, Oculus had been somewhat of an internet darling, with the humble start-up generating a great deal of buzz ever since it put the first prototype into the hands of Kickstarter backers, wider media and game developers.

Almost all who have had a chance to try the Oculus Rift VR headset wax lyrical about the unparalleled sense of immersion it delivers and its potential to shape the future of interactive entertainment. 

The Rift won over many heavy hitters from the gaming industry and the company even nabbed legendary game developer John Carmack as CTO.  

Late last year, the company received a fresh influx of venture capital to the tune of $US75m from big-name investors which included Netscape creator and internet golden child Marc Andreessen.

The positive buzz continued at the Game Developers Conference (GDC) last month, where the company showed off an improved and close-to-consumer version of the Rift headset. Oculus had reportedly resolved issues that caused motion sickness in some users from the first version, in addition to eliminating motion blur, reduced latency and improved positional tracking. Once again, pundits walked away impressed.

Squandering the goodwill?

From its grassroots crowd source funding days to pioneering the VR platform, Oculus Rift was poised to become one of the biggest tech success stories of this decade.

However, I can’t help but feel that the last two years of positive buzz garnered around the product have been squandered by the announcement of the acquisition by Facebook. The backlash has been resounding -- Facebook’s involvement is bad for gaming and just plain bad for the future of VR as a platform.

A big company buying out a small independent start-up will always have its detractors but this was much more than just your run of the mill anti-acquisition sentiment. The acquisition came, after all, from a company whose entire business model is based around monetising social interactions -- a company that has a history of crossing the data privacy line of its users.

Look at how Facebook tried to push its agenda with its first start-up acquisition, Instagram. On the surface, Instagram looks to be a company that functions independently within Facebook. You don’t even need a Facebook login to access the service.

But behind the scenes, the social media giant very quietly changed Instagram’s Terms of Service, effectively granting themselves the right to sell users’ photos to advertisers without consent, notification or compensation. Although the resulting backlash in late 2012 forced Facebook to backpedal, Instagram’s Privacy Policy was nevertheless later adjusted in a manner that would still allow the company to share user data with its parent company and third-party advertisers.

The reality is that Facebook will continue to push the data privacy boundaries in a way that best serves its data mining and ad revenue business model. There’s no sign of that model changing with the purchase of Oculus either.

Zuckerberg’s VR vision

In fact, Facebook CEO, Mark Zuckerberg made this pretty clear in an investor call about the deal.

He said that Facebook had no interest in profiting from hardware sales of the Oculus Rift; the revenue, he said, would come from creating a social platform for VR that would enable advertising opportunities such as “going shopping in a virtual store where you can touch and explore the products you are interested in, consulting with a doctor face-to-face or study in a classroom of students and teachers all over the world -- just by putting on goggles in your own home”.

"We view this as a software and services thing," Zuckerberg said. "If 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. That’s probably where the business will come from."

Zuckerberg’s VR vision is akin to Second Life, an online PC game from 2003 that blended social interaction with advertiser use. Users could buy real estate for their virtual avatars; companies could buy up offices; real brands could fill up shopping centres and populate billboards -- all inside the virtual city. Big brands flocked to the game world and set up shop, aiming to capitalise on its rapidly growing user base. Second Life established a virtual economy with real money, which at its peak in 2006 boasted a GDP of $US64m.

Zuckerberg’s vision of an ad-driven virtual world is far from the idealistic VR future that Oculus backers had originally envisaged.

Oculus founders cited Facebook’s deep pockets, engineering talent and willingness to keep hardware margins down as the key reasons for going ahead with the deal. But compromising the VR experience with a Facebook connected virtual world that monitors your interactions and tracks your every virtual move will only serve to deter potential buyers.