Facebook, Oculus Show VR Industry The Money

Two years, a $2 billion acquisition cost, and untold hundreds of millions of dollars later, Facebook still finds itself in a position to continue massively funding the birth of what CEO Mark Zuckerberg calls “the next computing platform.” During his keynote at today’s Oculus Connect 3 conference here in San Jose, CA, Zuckerberg and various Oculus product managers trotted out barrels-full of monetary promises in the form of development funds, some of them broad, some of them specifically targeted.

Here’s a list of what the company announced, funding-wise, today: 

  • $250 million in plain old developer funding (this on top of the $250 million it had already pledged)
  • $50 million in mobile developer funding
  • $10 million set aside for educational games
  • $10 million for the company’s diversity development program
  • Free Epic Unreal Engine licenses to all developers, up to $5 million in revenue (meaning, when the developed app hits that revenue mark, the license is no longer subsidized)
  • And for good measure, this year’s Connect 3 conference moved from the small-ish Hollywood Loew’s Hotel to the San Jose Convention center, growing to around 3,000 or so attendees. The company also gave every attendee the new $49 Rift enhanced headphones.

The sums, taken together or individually, are breathtaking. The cynical lens would tell you that perhaps the VR industry isn’t moving quite fast enough--that there haven’t been enough buyers, that there isn’t enough compelling content, and that one begets the other (you decide). On stage, Zuckerberg said there were a million VR users, and pictured at that moment was someone with a $99 Samsung Gear VR HMD, raising two questions: 1) how is Oculus counting that million, and 2) only one million?

There are undoubtedly truths submerged in that cynicism. It’s difficult to know what to expect of a sub-market’s infancy, and if it’s truly the next-generation computing platform, rather than mesmerizing computing peripheral (and I’ll admit, it could arguably be both).

Before I get to the more optimistic lens, I want to pause for a moment to juxtapose how far we’ve come. It was only 2014 that now-Oculus chief scientist Michael Abrash really laid out his quintessential straw man for what technological advances would need to be overcome for even basic PC VR to become viable (in a variety of blogs and a Steam Developer Day talk that start here). In those writings, and earlier (2012) missives like this one on latency, Abrash noted how difficult each of the achievements would be, and in fact he undershoots what was eventually necessary in a couple of instances (he thought we needed to get to 20ms of latency). And yet, it's been achieved.

Display technology--in terms of resolution per eye, custom hybrid Fresnel lenses, display persistence, and so on--has made quality optics a reality. Oculus and Valve have worked with AMD and Nvidia on clever changes to GPU rendering stacks, allowing VR applications to more easily reach those necessary latency thresholds, and to do so in ways that nobody could have imagined back then. Developers and game engine vendors have built ways to take the processing workload down even further. Today, we even heard about a new capability called asynchronous spacewarp that lets the application account for spatial movement (notably of Touch controllers) when a frame is dropped, helping to eliminate judder and ghosting. And so on.

Listening to Abrash give his annual five-year prediction talk this year, even more targets are being set, and even more work is being done to make further unimaginable advances.

In other words, although we take for granted the Rift and Vive of today, their very existence required massive investments, even outside of the two primary PC-based VR companies. But of course, those investments must pay off, which leads us back to the flip side of this conversation.

The optimistic view would suggest that an industry needs massive capital to get going. In the ongoing argument about whether chickens or eggs came first, somebody must emerge with both chickens and eggs and get us down the evolutionary road. Facebook and Oculus are obviously invested, and it makes sense that the company would be at the forefront of jump-starting this industry, even to the tune of another $350 million or so.

We can talk about how Oculus, with its Touch controllers (still not here until December) and its room-scale tracking (still requires purchasing another camera, at $79) has merely caught up with its chief rival; we can gossip about where Palmer Luckey is being hidden, after his recent rhubarb over donations to political entities; we can speculate about what’s in that next VR HMD prototype the company teased on stage; we can talk about how we’re still really only at Version 1.0 with no "OMG" moments in sight (the typical conference shiny penny announcements of Avatars and Web VR and audio enhancements aside).

But this is how it goes. It’s all incremental at this point. I think the most important development announced at this year's keynote was that the company lowered its minimum hardware specs to the point where you could build a VR machine for $700 or even less, making the cost of entry pretty much the same as for the mobile-based Samsung Gear VR (phone included). The company even announced a $499 machine from CyberPower PC.

The big waves happen every two or three years in almost every part of this industry, and we don’t even notice that we’re creeping up on them. Two years ago, it was hard to imagine we’d be here. Two years from now, we won’t believe what was merely possible way back then. And we’ll probably forget that Facebook threw down more than $1 billion (and probably much more) on top of its initial $2 billion acquisition cost.

Or maybe the company will still be the VR industry’s profligate spender. After all, who else can do it? Microsoft? Intel? Google?

Who will do it?

Fritz Nelson
Fritz Nelson is Editor-at-Large of Tom's Hardware US.