February 17, 2016

Facebook's Oculus Acquisition

The Future of VR & the Coming Creative Explosion that Will Birth Our Magnificent Metaverse

Not long ago I wrote about about current VR experiences, about "presence" and about what VR will be like less than 2 years from now. In many ways not much has changed since that post although if you've been following the news, you might just be thinking that the VR dream has been killed in its cradle or even that the earth itself has been torn asunder. I've read a ton of complaints concerning Facebook's gobbling up of Oculus and while some of them have merit, most of them do not. Allow me to explain why I think this storm in a teacup is not likely to take the wind out of Oculus' sails and why the deal with Facebook might actually increase their seaworthiness in such a way that it'll ensure much smoother sailing from here on out.

First and foremost, people who feel betrayed because they had other things in mind for Oculus' future when they helped kickstart it should get off their high horse and stop thinking that just because they contributed Oculus should now follow their lead and long term vision. Contributing to a kickstarter is a donation, not an investment. It does not turn you into a member of their board. Not all projects offer rewards for donating but Oculus did. It was clear from the get-go that the kickstarter was set up to fund devkit 1 and backers got those a long time ago. If we for a second entertain the thought that the funds we managed to gather do count as an investment it still wouldn't count for much. Even before Facebook's 2 billion dollar capital infusion they had already scored 300 million in first and second round VC funding. The 2,4 million kickstarter was always going to be peanuts compared to the budget they were going to have to amass in order to make it to market. We can always be proud of how we helped Oculus make a name for itself, how we helped get the project off the ground, indeed how we helped to kickstart it.

To the people up in arms about how they sold out, I don't think you realize just how much money it takes to get a product from being a prototype into consumers' hands. They had been talking from the start about how their biggest problem was not going to be technology but scaling problems. They know they have a huge market on their hands but You don't get to 500 Million Rifts Without making a few $billion. Billions Oculus did not have. To give you an idea, MS dropped 1 billion on marketing alone for the launch of the Xbox One and hardware costs are even higher. With Facebook stepping in as their sugar daddy, its moneybags have just steamrolled their biggest barrier to market.

Before we tackle the big question; "Why facebook?", we should first take a look at "Why not someone else?". Let's be honest here, someone else would have been either; Google, Apple, Microsoft, Amazon or maybe but less likely IBM, Samsung & Sony. These usual suspects are the only players because only these tech giants are the ones with enough money, infrastructure, mainstream consumer reach and leverage over hardware manufacturers to actually be able to push VR into the market in a big way. These things are always hush, hush but Oculus has hinted that multiple players were angling for them yet they explicitly chose for Facebook. To understand that you have to look at the big picture and at the strings that would have come attached to any deals they would have struck with the others.

All of them, except Google are less open than facebook. They own their own software ecosystems and stores and would have required Oculus to be locked to the platform they provide. There's no way Apple, Amazon, Microsoft or Sony would have allowed Steam or others to play a big part. Google on the other hand is, like MS, Apple and Sony, likely already working on its own VR hardware in their secretive labs.

"Why would we want to sell to someone like MS or Apple? So they can tear the company apart and use the pieces to build out their own vision of virtual reality, one that fits whatever current strategy they have?" -Palmer Luckey (Oculus Founder)

"We have even more freedom than we had under our investment partners because Facebook is making a long term play on the success of VR, not short-term returns."
"We promise we won't change. If anything, our hardware and software will get even more open, and Facebook is onboard with that."
"Facebook is going to be putting a lot of resources into Oculus going forward, this was not a one-time thing."
"This deal specifically lets us greatly lower the price of the Rift."

"We have not gotten into all the details yet, but a lot of the news is coming. The key points:
1) 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. More news soon.
2) We can afford to hire everyone we need, the best people that fit into our culture of excellence in all aspects.
3) We can make huge investments in content. More news soon."

"My primary goal is the long term success of VR, not short term warm and fuzzy feelings."-Palmer Luckey (Oculus Founder)

No, to truly understand why Facebook has an interest in the future of VR you have to see the big picture and think a decade ahead. I've seen many gamers complain that because of Facebook, Oculus will no longer be that good for gaming. Someone on reddit; "I don't really care about whatever second life BS Facebook plans to do with VR, I just want the device as new gaming technology." This is, imo, incredibly shortsighted. We hear the same sentiment with every technological convergence. When smartphones were released many were annoyed with the addition of "gimmicks" such as a camera and music player because they took away from what a phone was all about, making calls. When the Xbox-One was released MS took a lot of heat for talking about its mediacenter functionalities. It was supposed to be a gaming device and it playing music and video was going to ruin it. I'll once again quote Luckey to take away some of the fears surrounding the Rift's future as a gaming interface; "Almost everyone at Oculus is a gamer, and virtual reality will certainly be led by the games industry, largely because it is the only industry that already has the talent and tools required to build awesome interactive 3D environments. In the long run, though, there are going to be a lot of other industries that use VR in huge ways." It's wrong to think of VR as just a gaming interface.

Another quote from reddit; "The set of people who buy VR headgear and the set of people who like logging into things via Facebook do not intersect." While this is true today, the same would have at some point been true for every emerging market. If you go back far enough the set of people who bought modems didn't intersect with your average Joe either. Facebook is hoping to create an entirely new market and wants to get in on the ground floor by betting on the future of VR as the next paradigm in interfaces. So why facebook? Social is going to be one of VR's killer apps. Connecting with people and services from all over the world in crazy virtual spaces is what VR is all about. As the hardware shrinks and eyetrackers can be incorporated they'll be able to digitally filter the glasses from our view so that at some point we'll be able to meet face to face in Moe's Tavern, Quark's, Cheers, The Green Dragon Inn, Monk's, Central Perk or any other famous hangout.

It might be hard to envision but in the not so distant future we could be walking down one of Titan's beaches or exploring Jurassic Park with family and friends from all over the world. School children will walk around inside the human body and manipulate the contents of cells in their biology class. Instead of dragging yourself through a crowded store after a long day of work you could make it fun - shop from the privacy of your home with friends in a virtual replica of a store around the corner which you can destroy! Japan has already shown us that teledildonics is likely to revolutionize long distance relationships. One day we might be embodying robots working on asteroids in orbit or performing other dangerous jobs on earth! We won't be just traversing space, 360 degree documentaries and home videos will take us back to moments in time. You could even visit ancient Greece if you are willing to settle for a simulation. Tourism, Healthcare, Transport, Defense, Education, Entertainment, ... There is not a single industry that doesn't have the potential to be touched by this technology.

Both the Oculus founders as well as the Zuck himself have read Snow Crash, Neuromancer, Ready Player One, ... That is the end game, that is what they are going for. The first iterations of the rift will be gaming peripherals but Luckey talks about VR as a platform. A platform that will enable all sorts of experiences that will go way beyond gaming. If you've read those books you know that the end game plays out in the metaverse. They do not hide this, this is what they ultimately hope to create. What is the metaverse? "A collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space, including the sum of all virtual worlds, augmented reality, and the internet." Imagine worlds beyond worlds, new worlds, old worlds, worlds with and without rules, worlds grounded in reality or fiction, shopping worlds, business worlds, entertainment worlds, private worlds, personal worlds, ... Think of an advanced version of minecraft on a scale beyond what you can really fathom. One day virtual reality will harbor more worlds than there are grains of sand on all our beaches.

Those many earths as well as those many other planets that might not even obey the laws of physics will require stable servers for their continued existence. A globe spanning metaverse can only run on truly massive infrastructure. There are only a few players that might one day be capable of providing that. Facebook has already done some amazing work in infrastructure R&D and with initiatives like its OpenCompute project, has an excellent reputation when it comes to open source development. They actually have a real shot at making this happen. Rome wasn't built in a day. As long as humanity remains creative, the metaverse will keep on expanding. A hundred years from now historians will look back upon this moment in time and describe it in terms almost similar to how we describe the Big Bang. Worlds will explode into being, birthed by code and artistry, never ending creation will radiate outwards across multiple dimensions in digital space.

So far I've only talked about the complaints that don't have merit but I've also said that there are some worries that do. Those are, of course, privacy and ads. Now personally I am not really worried about ads. VR is all about immersion, they are not going to break that spell by interrupting a user's VR experience with pop-up ads. Facebook is smart enough not to shoot itself in the foot like that. That being said, they have no real control over content but just like gamemakers today can get money for incorporating ads into their games, so too will gamemakers of the future and if those games that do this run on servers hosted by facebook, they could take a percentage on the revenue they generate. This is no different from today, we will have to punish game creators that take this too far. If facebook does end up injecting ads it will likely be into a dashboard launcher similar to the Xbox. Sure it sucks but it's no dealbreaker. Considering the Rift has sworn allegiance to the open source community and has more in common with a pc than a console, it's likely that both alternative launchers as well as adblockers will be available even before launch.

Now what I am most worried about is privacy. I can imagine that all sorts of for profit entities are getting excited just thinking about persistent virtual spaces and perhaps even more so when thinking about eyetrackers, a technology with huge benefits for VR & AR experiences. It's easy to imagine a dystopian future where ads are forced upon you because they pause when you are not looking but that's nothing compared to what kind of information you could datamine from such devices. You would no longer have to press the like button, they would know by tracking what gets your attention and for how long. Such technology is not inherently bad, it could be used for good if it assists the user, but we all know that today this is not the case as it just gets sold to companies who hope to financially exploit it by knowing who to target when and with which ads to bombard them. Not to mention that even today non commercial entities like the NSA have access to this data as well and god know's what they are doing with it or will do with it in the future.

I am most definitely worried about that, and definitely don't think these worries should be swept under the rug but I do believe it's somewhat premature to be screaming that the sky is caving in on us just yet. The first few iterations of the Rift consumer version are pretty much guaranteed to be completely Facebook free so it's really only something we'll have to worry about further down the road. If Facebook does ever become invasive, we should drop it right there and then. By then others will have noticed just how big this market is so by that time we might have alternatives to choose from. I am willing to cut Facebook some slack here because there is no reason why Facebook, like Google, can't pivot and morph into something much bigger than social and ads.

Although Facebook's current business model is based on ads and selling user information, it doesn't have to be that way for VR and the Oculus Rift. Now it's only normal that when thinking of VR's future in Facebook's hands, people simply extend its current monetization schemes but for FB, taking that route would be a pretty stupid move. VR is something completely new and should be approached with an open mind if anyone wants to see where new revenue streams are going to be found. Attracting business or partnering with event organizers could earn them a hell of a lot more than ads. Imagine facebook running virtual replicas of stores on their servers and taking a percentage of every good sold through them. Imagine them emulating steam, allowing users to sell their content to each other and skimming a percentage off of those transactions. Think about how much money they would make teaming up with the IOC and selling front row seats for the Olympic games. They could put you on the stage next to your favorite artist or give you a ride on a rocket to orbit.

We should at least wait to boo it off the stage until we really know what we are booing at and not kill it before it's even left the starting gate.

As Zuckerberg said in their investors call; "Gaming is just the start. After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court-side seatat a game, studying in a classroom of students and teachers all over the world, consulting with a doctor face to face, or going shopping in a virtualstore where you can touch and explore the products you're interested in."
"We still have a lot of work to do on mobile, but at this point we feel strong enough in our position that strategically we also want to start focusingon building the next major computing platform that will come after mobile."
"Today's acquisition is a long-term bet on the future of computing."
"This is really a new social platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imaginesharing not just moments with your friends online, but entire experiences and adventures. These are just some of the potential use cases."
"If you think about the social applications alone, this can change the way we communicate with our friends, families and colleagues. Little detailslike being able to make eye contact with someone with zero latency makes you feel like you're really present together."

The team over at Oculus had this to share; "Mark and his team share our vision for virtual reality’s potential to transform the way we learn, share, play, and communicate."
"This partnership is one of the most important moments for virtual reality: it gives us the best shot at truly changing the world."

Facebook has more than 1 billion active users. For Oculus, in many ways this was not a sell out but a market buy-in.

Oculus has assembled a dream team of code wizards and hardware visionaries. They already had John Carmack on board, one of the founders of Id and the creator of games like Doom and Quake, a true industry legend and now, just days after the facebook acquisition, they've scored another legendary heavyweight coder with Michael Abrash. Because of all the groundbreaking stuff these guys have developed in the past, they are pretty much swimming in it. In their spare time they launch rockets for their privately funded Armadillo Aerospace company and not long ago they won the Level One Lunar Lander X-Prize Challenge. These guys are no longer working for the money, they follow their heart. They've been talking about VR for decades and really do want to see it succeed. To finish off this post, I'll let Abrash do the talking.

The Path to the Metaverse

"Sometime in 1993 or 1994, I read Snow Crash, and for the first time thought something like the Metaverse might be possible in my lifetime."
"We're on the cusp of what I think is not The Next Big Platform, but rather simply The Final Platform – the platform to end all platforms."
"The final piece of the puzzle fell into place on Tuesday. A lot of what it will take to make VR great is well understood at this point, so it's engineering, not research; hard engineering, to be sure, but clearly within reach. However, it's expensive engineering. And, of course, there's also a huge amount of research to do once we reach the limits of current technology, and that's not only expensive, it also requires time and patience – fully tapping the potential of VR will take decades. That's why I've written before that VR wouldn't become truly great until some company stepped up and invested the considerable capital to build the right hardware – and that it wouldn't be clear that it made sense to spend that capital until VR was truly great. I was afraid that that Catch-22 would cause VR to fail to achieve liftoff.

That worry is now gone. Facebook's acquisition of Oculus means that VR is going to happen in all its glory. The resources and long-term commitment that Facebook brings gives Oculus the runway it needs to solve the hard problems of VR – and some of them are hard indeed. I now fully expect to spend the rest of my career pushing VR as far ahead as I can.

It's great to be working with John (Carmack) again after all these years, and with that comes a sense of deja vu. It feels like it did when I went to Id, but on steroids – this time we're working on technology that will change not just computer gaming, but potentially how all of us interact with computers, information, and each other every day. I think it's going to be the biggest game-changer I've ever seen – and I've seen quite a lot over the last 57 years.

I can't wait to see how far we can take it."

Warner Bros. bought the film rights for Ready Player One. “They’ll need to hurry up and make it while it’s still science fiction,” -its author, Ernest Cline, after having experienced the latest Rift prototype. - http://www.forbes.com/sites/insertcoin/2014/03/28/ready-player-one-author-ernest-cline-believes-in-facebooks-oculus/


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