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Some thoughts on the recent Facebook purchase of Occulus Vr, and the resulting croudfunding out cry.

David Oneill, Blogger

April 30, 2014

6 Min Read

Virtual Genius


To grasp the future potential of the  Oculus Rift, it helps to know a little bit about John Carmack. A programmer, who in the early 90s cracked the problem of how to create real time three dimensional games, triggering a quantum leap forward in graphics capacity. His innovation is the  flash point around which the current giants of games industry have built their  multi billion dollar empires. And it would seem that his eye for innovation is as keen as ever. That’s how he found student Palmer Luckey and his Oculus Rift project two years before Mark Zuckerberg.


On March 26, Facebook announced that it was acquiring Oculus VR, in a deal worth 2 billion dollars. The social-network wanted to get the rights to the technology behind the company’s sole product, The Oculus Rift  virtual-reality headset.


Two billion dollars is a lot of capital for a two-year-old hardware company that has yet to ship a single market ready product. It’s an enormous gamble on virtual reality, which until the Rift was considered a technological cul de sac.  Until the Rift, VR was considered 1980s nostalgia everyone felt slightly sheepish about believing in at one point, like flying cars or world peace.


Carmack demoed and promoted Luckey's home made prototype at E3 2012, Luckey’s prototype  running Carmacks own  3d software. The response was explosive. A major developer announced its newest title would support the Rift, id Software's Doom 3: BFG Edition, and by june classic titles such as Team Fortress, Hawken and Half life 2 were ported to the Rift.


In August 2012 Kickstarter became host to an ambitious project called the Oculus Rift, Oculus VR was hopeing to raise  250,000 dollars to cover further development.

Backed by gaming enthusiasts the world over, many of the Kickstarter campaigns early supporters of Oculus are voicing their frustration at the company’s decision to sell itself to corporate interests.


The early supporters  have been using blogs, Twitter, Vine and even Kickstarter to voice their dismay at the Facebook deal.Their reaction is akin the that of an invested shareholder, outraged at the buy out. Though they have no financial stake in the company, the issue has become a screen behind which gamers can vent their spleens at the larger industry.


The vigorous online backlash against the Facebook purchase illustrates how the micro market of crowdfunding sites can clash with the macro market of the  corporate world.

The Oculus deal is a huge success for crowdfunding services like Kickstarter  because it proves the Kickstarter ideals validity. Palmer Luckey and his Oculus VR team had ambitious idea to revive virtual reality, and make commercially viable. They asked the Kickstarter community for $250,000 and were rewarded with $2.4 million in support from almost 10,000 donors.


Using this capital they developed a business that attracted a further $90 million in venture capital in eighteen months and a $2 billion offer from the world’s largest social media network.


What more could anyone want from a Kickstarter project? While a big buyout is viewed as a win for a venture capitalist or a CEO, the Oculus deal left a bitter aftertaste in the mouths of many. Kickstarter backers were seeking something besides return on investment when they took out their cash cards. Early backers admired that Oculus had sprung from the mind of Luckey, a 21-year-old with a vision, rather than a tech giants research and development program.


Luckey has recently be using Reddit to defend the purchase, arguing that Oculus will have more autonomy, more resources at its disposal and the ability to offer a cheaper product to the consumer than it could as an independent company. “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,” he wrote.


Kickstarter backers don’t doubt that Facebook’s support will help resurrect virtual reality and bring it into mainstream market faster than Oculus would’ve managed on their own. But some worry that the final product won’t look like the product they envisioned when they gave money to the Kickstarter campaign. Oculus had been envisioned as a gaming device, but social media companies like Facebook has designs on the Rift as a communications platform that may one day serve users targeted VR advertisements. Many of these gamers worry that the innovation of this technology will be squandered on Farmville style social media games.


Facebook’s impact on Oculus Rifts development over the next year or so may have a profound impact on the Kickstarter model. But the deal may color the way the public view crowdfunded projects.In the future, donors may be a lot more skeptical about putting in money, especially in projects where they could have even an inkling of an idea that this might be bought out by a tech giant like Google, Facebook, or Apple. These media giants believe in backing projects for financial, commercial reasons. For them it’s a lot about an ideal or altruism, but about capitalism.


Still, backers will wonder how the new virtual reality sector might have developed differently if its hottest startup hadn’t gone corporate.


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