Maybe Facebook didn’t overpay for Oculus after all

Facebook needs to attract more than just gamers to use the Oculus Rift virtual reality headsets if its $2 billion investment is going to pay off. (Jae C. Hong/AP)

It was easy to be skeptical when Facebook paid $2 billion for virtual reality company Oculus VR in late March. Sure, virtual reality seemed to be on the cusp of entering the tech mainstream, but it was hard to see how Oculus  would meaningfully contribute to the future of Facebook other than adding a veneer of “cool” to a social network that was already at risk of becoming “uncool.” However, just months after the acquisition, we are already starting to see the first signs of a supporting ecosystem for the Oculus Rift virtual reality headset, as entrepreneurs and hackers find ways to position themselves for a long-term play in the virtual reality sector that goes beyond just gaming.

Take the winner of this year’s TechCrunch Disrupt NY hackathon: the Oculus Rift-friendly Vrban. What Vrban promises to do is to make immersive virtual reality available for urban planners or architects wearing the Oculus Rift. Say, for example, you’re planning to construct a brand-new high-rise building in New York City. Using Vrban, you could see what this proposed building would look like in 3D against the city skyline, and even how it might impact the view of other surrounding buildings by altering a number of variables related to time of day, point of view and location. It’s a classic example of how VR might go beyond just gaming to become a mainstream activity.

This is exactly what Mark Zuckerberg had in mind back in March when he told analysts that Facebook saw in Oculus the makings of another social platform. “Gaming is just the start. After games, we’ll make Oculus a platform for other experiences,” Zuckerberg told analysts. Oculus has the potential, he said, to be “the most social platform ever.” In order for that to happen, though, it will take many more companies and many more entrepreneurs building that supporting an ecosystem for the Oculus Rift. It will take auto designers using the Oculus Rift. And educators. And doctors.

Given the willingness of Facebook to hand out billions in cash and stock to a virtual reality company, it could be the case that we’re going to see more hackers and innovators finding ways to piggyback on the virtual trend in innovative ways. When that happens — and if gamers don’t abandon the Oculus Rift in waves — that $2 billion paid by Zuckerberg could turn out to be a bargain. In many ways, it would be the same case as we saw with Apple and the development of its apps ecosystem for digital devices such as the iPhone and iPad. Only, in this case, it’s not just apps we’re talking about — it’s also hardware and software that can be integrated into a device like the Oculus Rift.

The risk, of course, is that the Oculus Rift turns out to have so many new competitors that it quickly loses its first-mover advantage. It has to be a bit worrisome for people back at Facebook HQ that at the TechCrunch Disrupt event in New York, it was possible to hack together a serviceable version of the Oculus Rift in under 24 hours with just a bunch of mirrors, duct tape and cardboard. Remember, the Oculus Rift started as a $2.4 million Kickstarter project back in September 2012 before Facebook acquired it nearly 18 months later in March 2014. That means that other groups of engineers and entrepreneurs could hack together something like the Oculus Rift as well. And now Oculus is facing legal challenges from ZeniMax, which claims to have developed at least some of the underlying technology.

All of this points to the difficulty of a position of an entrenched technology company such as Facebook facing the “build or buy” decision – either you jump on the trend early and turn out to have backed the wrong horse, or you jump on the trend late, in which case, there may no longer be any horses to back. For now, the excitement and geeky acclaim that originally surrounded the Oculus Rift should give hope that the $2 billion investment actually turns out to be worth multiple billions later for Zuckerberg and Facebook.

Dominic Basulto is a futurist and blogger based in New York City.



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