3 Ways The Facebook-Oculus Deal Could Work Out, From Awesome To Terrifying

Facebook just placed a $2 billion bet on the Next Big Thing by snapping up startup Oculus VR and its young but much-gushed-over virtual-reality headset, the Oculus Rift. And not in the next-hit-app sense or the everyday-bullshit-press-release sense—like most actual Big Things, Oculus isn’t a one-trick-app or a gimmick.

In reality, it’s a platform so vast we literally cannot see its edges. The Oculus Rift lays the foundation for a future that we can hardly even imagine until we try it on. Mark Zuckerberg tried it on. Then he bought it.

So now what happens?

Scenario #1: With More Resources, Oculus Thrives 

Facebook is no hardware company—we’ve known that for years. But as Zuck and co. have reminded us endlessly, Facebookis a mobile company. On a conference call Tuesday to discuss the Oculus acquisition, Zuckerberg asserted his belief in virtual reality as the next major platform with fanboyish conviction. And that’s a good sign.

“Now we have this strong position on mobile and we’re feeling increasingly good about that … we think vision is going to be the next really big platform,” Zuckerberg said. “There are not that many things that are candidates to be the next computing platform.”

Unlike WhatsApp, Instagram and a string of small earlier Facebook acquisitions, Oculus isn’t a defensive play—it’s an offensive leap toward the next generation of computing. And like Instagram, Oculus has a vocal body of fierce loyalists who’ve loved the company from day one. Those true believers didn’t keep ads off of Instagram, but they kept Facebook—which still lets Instagram operate pretty much independently—in check.

To imagine the best case scenario for Oculus, let’s suspend our skepticism for a moment and listen to Palmer Luckey, the visionary founder of Oculus, who appears to have stayed up all night making that case on Reddit:

  • We now have the freedom to make the right decisions without worrying about short financial profit or investor returns.
  • We are going to have a lot of people working on other things as well (film, education, communication, etc), but we are gamers at heart. None of our gaming resources will be diverted.
  • This deal specifically lets us greatly lower the price of the Rift.
  • Oculus continues to operate independently! We are going to remain as indie/developer/enthusiast friendly as we have always been, if not more so.
  • I guarantee that you won’t need to log into your Facebook account every time you wanna use the Oculus Rift.
  • 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. 
  • If anything, our hardware and software will get even more open, and Facebook is onboard with that.

Key takeaways? The Rift will get cheaper. Oculus was feeling the heat from its investors and wants to be left alone for a while. You won’t need to log into a Facebook account “every time” you fire up the Rift (every time? Maybe just the first time? Whew). Facebook will let Oculus continue to serve its core indie developer community, assuming that community sticks around.

Essentially, the Oculus team remains independent, gets an infusion of talent and resources and keeps its head down working on the best virtual reality experience it can make. (Caveat: Now it’s making it for Facebook.)

The bit about the Oculus hardware and software staying open feels a little hard to believe, but then again Facebook created the Open Compute Project, an initiative to pry the lid off of proprietary server hardware in the style of open source software projects.

Scenario #2: Oculus Loses Its Innovators—Welcome To RiftVille

For anyone who’s followed the short evolution of the Oculus Rift, pairing with Facebook feels like a nightmare scenario. Oculus, with its early model held together by what looked like duct tape, was a rare scrappy upstart that punched way above its weight.

Facebook, once scrappy in its own right (if one can be scrappy at Harvard), is now a global social media force the likes of which the world has never seen. And in spite of its supposed enduring hacker ethos, it’s difficult to trust a company that snaked into our lives ten years ago and has somehow held us, often unhappily, in its thrall ever since. This fundamental distrust is keeping Oculus believers awake at night. (OK, last night, at least.)

So Oculus, which was an open platform for virtual imagination, now answers to a corporate overlord—one that makes billions from hacking our brains and serving us ads for things we never even intended for it to know we cared about. There is no precedent for how Facebook will handle Oculus. Instagram, WhatsApp, Parse—all useful tools in their own rights—don’t come close to the disruptive potential many see in the Oculus Rift.

Facebook may leave its new toy alone for a while, but former Oculus enthusiasts with big ideas are wary of the long game—the one that Facebook admits it’s playing. Imagine if indie game developers band together and jump ship. (Notch, the legendary creator of Minecraft, is already leading the charge on this bit.)

In this scenario, the notion of a collaborative, open virtual reality platform dies on the vine. And it’s not just about game makers. Science labs around the country, even NASA, turn away from Oculus, fearing its ties to a company that thrives on owning and selling data about its users. Potential education and medical applications are rendered null by privacy concerns.

Scenario #3: Oculus Thrives … And Facebook Turns The Ads Spigot

In 2012, Facebook struggled to conquer mobile. Already extremely slow to bring an iPad app to market, Zuckerberg eventually admitted that investing heavily in clunky HTML5 apps rather than building native was his “biggest mistake.” Then Zuck turned the ship around, and now 53% of Facebook’s ad revenue comes from mobile. Two years ago that number was 0%. Facebook is an advertising company, and while Oculus may no longer have investors to answer to, Facebook does.

Again, a reminder: Facebook is an advertising company. In its last reported quarter, $2.34 billion of its $2.59 billion total revenue came from advertising. Facebook hit its mark, serving targeted ads over smartphones and tablets, platforms on which the company commands unprecedented levels of engagement.

You know what else is engaging? The 360-degree immersive virtual environment that the Oculus Rift brings to the table. Image it now. We languish in a hyper-addictive virtual purgatory of Candy Crush and FarmVille forever, shuffling around compulsively issuing Likes in four dimensions instead of two.

Facebook doesn’t want or need to make money off of the hardware (again, it’s an ad company, not a hardware company). It will subsidize the hardware to get the platform into as many hands as possible. Zuckerberg stated outright that the acquisition is a “software and services thing,” going on to mutter something vague about people buying virtual goods … and well, yes, there will be ads—but don’t worry about them yet.

Sure, as Zuckerberg said, the real strategy might be five years out—Oculus will likely be left to its own devices in the meantime—but once the most engaging platform ever created reaches perfection, Facebook’s green-eyeshade types will come calling. And they won’t need to go far.

Oculus Rift images by Sergey Galyonkin via Flickr, Facebook image by Taylor Hatmaker

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