In many ways, the emergence of Oculus VR perfectly exemplifies the American Dream. Without any corporate involvement, one average (although very smart) guy took his invention from concept to a multi-million dollar business. He had a good idea that led to fame and fortune, and he did it all with the support of the public at large. It’s the type of stories we tell kids in America, along with telling them that anyone can be President. Using money gained through crowdfunding, Palmer Luckey introduced a working prototype that promises to change multiple industries forever. Oculus became an independent company, built in part with the blessing of it future customers.
But then the company was purchased by corporate behemoth Facebook in a $2 billion acquisition, and everything changed instantly.
While some Oculus fans are happy to see the VR company come under the umbrella of an outfit as well funded as Facebook, far more backers feel outright betrayed. Of the nearly 1,300 comments on Oculus’ blog, the vast majority are extremely negative. “Not happy about this at all,” wrote developer Alex France, echoing the sentiment of many early backers. “The community who have served Oculus so well, never mind provided all the initial cash to make everything happen, have just been burnt.”
He is far from alone. But while original supporters shake their heads, they might not realize the tough choices Oculus faced and the difficult road ahead. Here’s why the Oculus faithful are fuming – and why the fledgling company may not have had a choice.
For many, the betrayal is personal. Oculus VR wouldn’t exist without the direct support of backers willing to take a chance and lend their own money. When Luckey took his idea to Kickstarter in 2012, he was looking for $250,000 to build prototypes. The project ended up earning over $2.4 million with nearly 10,000 people willing to invest. Since then, more than 60,000 units of the first generation of Oculus Rift have shipped to developers and fans willing to pay for a prototype.
Oculus has never hidden its intent to raise capital.
The sense of betrayal goes deeper than that though, and is fueled by Oculus itself, who may have accidentally made all the wrong moves.
Oculus has never hidden its intent to raise capital – the $2.4 million it raised on Kickstarter was just the beginning. Following Oculus VR’s initial crowdfunding success, the company received $16 million in venture funding. Within six months it secured another $75 million in venture capital money, bringing Netscape co-founder Marc Andreessen, a former outsider and innovator himself, onto the board of directors as part of the deal.
Throughout it all, Oculus kept the image of an outsider, a startup with a potentially disruptive new product with roots in gaming, but a potential future far beyond any one niche. Id software founder John Carmack’s decision to come aboard Oculus as CTO further buoyed this impression. Besides Carmack’s reputation as a certified genius who spends his free time building rockets for his award-winning aerospace company, Carmack has long been a vocal proponent of open source software, and even views software patents as a crime. His hire furthered the impression that Oculus favored a more open approach to development, free from corporate dictates.
Oculus cultivated this image, too. In an interview with GI.biz back in February 2014, Luckey even claimed that the company preferred to remain independent despite interest from others.
“We want to do things our way. There are certainly people who are interested… but we have a vision for our consumer product and we know that we’re going to be able to pull it off,” Luckey said. “We don’t want to be assimilated into someone who’s going to have us working on their own product or their own vision of VR – we want to be able to deliver our own vision of what VR is.”
When Facebook, a company that has been accused repeatedly of anti-consumer practices thanks in part to massive privacy violations, bought Oculus, the two philosophies seemed at odds – despite Oculus’ assertions.
“At first glance, it might not seem obvious why Oculus is partnering with Facebook, a company focused on connecting people, investing in Internet access for the world and pushing an open computing platform,” Oculus said in a press release. “But when you consider it more carefully, we’re culturally aligned with a focus on innovating and hiring the best and brightest; we believe communication drives new platforms; we want to contribute to a more open, connected world; and we both see virtual reality as the next step.”
Backers weren’t buying it.
To some backers, Facebook wasn’t the problem – taking a huge check from anyone was.
Some have even noticed the difference in language between the Oculus announcement and Facebook’s. While Oculus refers to this a “partnership” in its press release, Facebook calls it an acquisition.
To some backers, Facebook wasn’t the problem – taking a huge check from anyone was.
“This is not want [sic] I backed the Kickstarter for. What we hoped for was an open and independent VR headset, not an additional way to share banner ads and status updates,” Stefan Insam seethed online. ”You got money from Kickstarter, great. You got money from investors, OK, that makes sense, as it’s a costly endeavor. But selling out for $2 billion like a street whore just waiting for the big client? That’s a disappointment beyond our fears, that’s just the worst choice you could have made.”
While the first wave of backers may be left with nothing but regrets, those who have ordered the newest development kit can still speak with their wallets. Many commenters are claiming to be among those that put money down for the second generation of the Oculus Rift, which costs $350 and will ship in July. Several are claiming they have cancelled their orders, while others are considering cancelling but are waiting to see what happens next.
“I am inches away from cancelling my DK2 preorder. There is nearly no chance of anything good coming from this partnership, and a lot of bad,” Serge Fjetland posted. “I’m going to be watching the news closely over the next week or two, before I make my final decision, but any signs of Facebook meddling will be a guaranteed cancel …”
Some developers are taking a stand, too. The creator of Minecraft, Markus “Notch” Persson, went so far as to cancel the planned Minecraft edition that was being designed for the Oculus Rift. Persson simply claimed that “Facebook creeps me out.”
Did Oculus have a choice?
While Oculus may have caused backers to feel betrayed, it may have had less of a choice than they realize.
Even before Oculus began its Kickstarter campaign, Sony was toying with the idea of a virtual reality headset as far back as 2010, and other companies like Vuzix have been building similar hardware for years. With Sony’s recently announced VR prototype “Project Morpheus” for the PlayStation 4 on the way, the race for virtual reality is on.
In a recent interview with Digital Trends, Luckey addressed what were then still rumors about a Sony VR headset. “Sony certainly has the resources to make something really incredible,” Luckey said. “They have the resources to put a huge effort behind VR and show that they’re committed.”
With Sony in the game, Oculus suddenly had a $19 billion competitor – which, coincidentally, is the same amount Facebook just dropped on the acquisition of the messaging app WhatsApp. Oculus could put out the best product and be first to market, but if a company like Sony, with billions to spend on marketing and manufacturing can produce something similar, put out more units, advertise around the globe, and offer it for less money by being able to take an initial loss, Oculus just couldn’t compete.
It seems that Oculus knew this too, and as soon as Sony officially announced its intention to join the VR fray, everything changed. According to an interview with Venture Beat, Luckey and Oculus co-founder Brendan Iribe confirmed that the acquisition went from talks to a firm deal in just three days, which means talks happened just days after the unveiling of Morpheus. That is shockingly fast for a deal of this size and complexity, and suggests that Oculus knew it needed help.
With Facebook, Oculus gets a parent with pockets even deeper than Sony’s, and no competing siblings within the company. Imagine if a company like Microsoft – which has likely spent a good deal of money on research into a VR headset itself – purchased Oculus. The two companies would go through an awkward merger as they dealt with Microsoft’s desire to incorporate Oculus’ VR tech into existing hardware. Facebook has no such baggage.
In answer to many of the criticisms, Luckey recently took to Reddit to try to assuage some of the concerns.
“I am sorry that you are disappointed. To be honest, if I were you, I would probably have a similar initial impression!” Luckey said in response to a Reddit post. “There are a lot of reasons why this is a good thing, many of which are not yet public.”
When asked about how Oculus might change as a company, Luckey seemed confident that they would have more freedom now, not less.
“This acquisition/partnership gives us more control of our destiny, not less! We don’t have to compromise on anything, and can afford to make decisions that are right for the future of virtual reality, not our current revenue,” he said. “Keep in mind that we already have great partners who invested heavily in Oculus and got us to where we are, so we have not had full control of our destiny for some time. Facebook believes in our long-term vision, and they want us to continue executing on our own roadmap, not control what we do. I would never have done this deal if it meant changing our direction, and Facebook has a good track record of letting companies work independently post-acquisition.”
Fans that feel betrayed by Oculus by Facebook aren’t going to get past that feeling anytime soon. And they have good reason to hold a grudge. They supported it as an independent company, and now Oculus is anything but. But give Oculus some credit: It may be an unpopular choice to team up with Facebook, but it might also end up being the best option Oculus had.