In 2012, a company called Oculas was founded in Irvine, California by a group of mostly college drop-outs: Palmer Luckey, Brendan Iribe, Michael Antonov, Jack McCauley and Nate Mitchell. Their goal was to make a better head mounted display. A display better than every of the 50 head mounted displays that Luckey collected over the years. The company used a crowdfunding kickstarter campaign to fund an early version of their product. The idea was to create a head mounted display (headset) that tracks human motion and produce pictures that instantly simulates how pictures of objects would look like while humans are moving – hence the term virtual reality (VR)
Two years elapsed, Facebook buys Oculus for a staggering US$2.3 Billion mix of cash and stock in 2014. Luckey, who was 21 years old at the time, instantly becomes worth US$700 million. Facebook then dumps large sums of money into Oculus to get the “virtual reality” headset product to market as soon as possible.
Under Facebook, Oculus becomes the company’s sweetheart. Oculus gets moved from Irvine to Facebook’s headquarters in Melano Park in 2015. In 2016, Facebook/Oculus release a bunch of products starting with the Oculus rift which retailed for US$599 (reduced to USD$399 in 2017). The rift required additional special hardware to operate. This requirement didn’t make the path easy for VR to being a mainstream product. In order to overcome this hurdle, Facebook then launched Oculus Go in 2017. The Go didn’t require special hardware and had a lower price of $US249, at the expense of the quality of experience. There seemed to be a marginal improvement. Buying Oculus appeared to be a strategic win at first glance for both Facebook and Oculus, as this would theoretically allow for great collaboration between the Facebook AI team and Oculus’s virtual reality engineers. However, three years since the acquisition the VR technology still fails to become a mainstream product. Finally, Facebook announced the Oculus Quest in 2019 with a higher price tag of US$399, $50 more than the Oculus Go.
We look at the story of Oculus and after analyzing this. It is evident to us that Facebook/Oculus and VR is a classic Kayfabe situation. Similar to the concept of Kayfabe in wrestling, where everyone understands the game and pretends to play along. Everyone in the VR world is playing along while Facebook tries to bring VR to mainstream culture.
However, this is not going to work. Here is why:
Let’s first back up for a moment and review the first principles of innovative products. In order to bring a product to mainstream culture, first the product/service has to appeal to the customer, second the product/service has to have a value added to the customer.
Examining the VR technology, there seem to be some appeal from certain customers. Mainly customers who are focused on games while others who are into entertainment would find VR interesting. However, this appeal is not enough for technology like VR to become mainstream. In our analysis, we found that Oculus’s VR technology is lacking the ability to break the barrier that VR headsets impose on human senses by obstructing natural vision. VR also struggles to overcome the feeling of isolation that humans experience while using this technology. While using a VR headset you not only are isolated from the physical world, but you are also isolated from everyone around you. The physical connection to people is fundamental to human needs. With that in mind, VR has to not only overcome this fundamental design flaw, but also somehow exacerbates the opposite. By this we mean that VR has to enhance the users connection to the physical world and people in order to become mainstream technology and offer any good to the world.
In our analysis, we that found that Oculu’s VR technology lacks the ability to break the barrier that VR headsets impose on human senses by completely obstructing natural vision.
Mike Hassaballa
The second issue we found VR technology is facing is value add to users. While VR at the first glance seems to be a technology that is intriguing for the gaming and entertainment industry, it unfortunately adds little value to users in other sectors from a technology reediness stand point. In addition, for gaming and entertainment industries, the market is slowly gravitating into low cost/freeware products and services. Simply put, this customer segment wants to get free stuff, which makes it very difficult for technology makers to establish a reasonable price points for a product/service to be come mainstream.
In this last section we tackle others players and make some honorable mentions.
Magic leap which was bought by Google was thought to be a tech unicorn. The company was surrounded by a lot of secrecy, something that is odd in the mainstream tech world and raised red flags if the company has anything to show. The company didn’t produce anything of real value.
Microsoft holo lens embarked on a different path with a focus on using augmented reality to enhance user experience with the physical world. However Holo’s lens failed to become mainstream because the product was very expensive and because it focused on specific group like business and industrial users. In addition it offered mediocre technology and limited experience.
HTS vive has the technology and better experience element, but not enough customer base that can form critical mass for VR to become mainstream..
Finally Playstation used VR to tag along and please some of its gaming customers with a compromise in experience quality.
To summarize Facebook’s VR experiment is closest to a kayfabe. All the VR developers efforts to make VR mainstream is faced by big hurdles to overcome. The two issues described above need to be resolved before VR can have any chance of becoming mainstream.
Mike Hassaballa 