Is Facebook, Inc.'s Oculus Rift VR Headset Getting Ready for Prime Time?

When Facebook (NASDAQ: FB  ) announced its $2 billion acquisition of virtual reality headset manufacturer Oculus in March, the deal was a bit of a head-scratcher. Sure, the $19 billion buyout of WhatsApp got many of the headlines, and rightfully so. WhatsApp's over 600 million active users are more than twice the size of Twitter's (NYSE: TWTR  ) active user base, and could put even more pressure on the wannabe tweet master, making it easier to see the logic behind the transaction.

Facebook's first foray into hardware via the deal for Oculus and its Rift VR headset may have caught some by surprise, however, it has a clear path to monetization: gaming. But the Rift is still in development mode, so who knows when Facebook will actually get it out to the masses. But based on some new developments and efforts on Facebook's part, it appears Rift might hit virtual store shelves a bit sooner than some industry pundits may have thought.

What's a Rift?
As Facebook CEO Mark Zuckerberg put it, Rift gives users an "immersive gaming" experience, an area of focus for Facebook over the last several months.

If you've ever witnessed a gamer who was in the midst of taking over the universe, you know just how addictive gaming can be. Now imagine those same folks utterly immersed "inside" their game of choice. There's a reason Oculus has already sold over 100,000 Rift development kits. But dominating the VR gaming market -- and the numerous revenue opportunities it presents -- is only part of the Rift equation.

The latest on Rift
Facebook has what it calls a "bounty program," in which developers are monetarily rewarded for finding potential security threats or programmatic concerns. The idea is to use developer resources from the entire technology community, rather than relying solely on in-house talent. In fact, Facebook paid about $1.5 million in bounties last year alone. And as of a few days ago, Facebook's bounty program expanded to include Rift.

Getting the kinks out of Rift is quite naturally the first step in readying it for mainstream use, and now Facebook has a horde of gaming development gurus on the job. Does that mean Rift will be available by the holidays? Not likely, but it's a sign that Facebook is getting the ball rolling.

As for Twitter, its attempts to address user growth and engagement issues took a hit recently when it began force-feeding users with posts from people they were not following. While Facebook explores additional revenue opportunities, Twitter is in full-on damage control mode. Of course, that's what market leaders like Facebook do: take charge, not follow, as Twitter has so often, including the late introduction of mobile in app ads, and testing video advertisements.

More positive Rift VR news came recently from none other than Markus Persson, creator and driving force behind the ridiculously popular game Minecraft. With over 100 million registered users, and nearly 16.5 million paid subscribers, Minecraft offers Rift a huge opportunity. The only problem was that Persson nearly went ballistic in March when Facebook announced it was buying Oculus, which ended with him ditching plans to make a VR version of Minecraft.

Ah, but time may indeed heal all wounds. Persson went on Twitter earlier this week to say he's "officially over being upset" about the Facebook acquisition of Oculus. A "sure-fire" gaming winner may not exist, but a VR Minecraft experience would be as close to one as possible. Persson's tweet isn't confirmation he'll get to work on an updated Minecraft, but like Facebook's bounty program, it certainly bodes well going forward.

Not just gaming
Zuckerberg was adamant when announcing the Oculus purchase that a gaming solution was just the beginning of what Rift can, and will, become. Some developers at a recent Netflix "Hack Day" provided a glimpse of Rift's possibilities. One developer constructed a VR "room," complete with a Netflix directory of shows that could be scrolled through using nothing but hand gestures. Once a show is selected inside what was dubbed "Oculix," the viewer can sit back and enjoy the content from "inside" the show. Can you imagine the possibilities a Facebook-Netflix partnership would present?

Final Foolish thoughts
Like a VR Minecraft, there's no way to know if a VR Netflix will come to pass, but Oculus demonstrates one of the innumerable possibilities Rift presents to Facebook. Like anything else, it takes time to assimilate acquisitions and grow new revenue sources, so don't expect immediate profitability when Rift hits the street. But Facebook has to start somewhere to get VR ready for prime time, and it appears Zuckerberg many have just hit the "go" button.

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Read/Post Comments (6) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 26, 2014, at 11:14 AM, HectorLemans wrote:

    I will never in a million years understand how this is worth $2 billion. Yes, the possibilities truly are endless - I can strap a pair of restricting goggles to my face and do everything "virtually" instead of looking at a screen, tables, phone, etc. How exciting!

    \sarcasm

  • Report this Comment On August 26, 2014, at 12:26 PM, PurgatorialFlame wrote:

    HectorLemans... the reason this is worth more than $2 billion is the datamining possibilities (Facebook's primary source of revenue for advertising).

    Biometrics is a booming in the wearables sectors because it gives such juicy information on the customers.

    If the Oculus Rift includes eye-tracking, then there is a wealth of information that FB can acquire from the users... traditional data-mining is measured in clicks, but now they can find out exactly where the customer is looking and for how long... if you can't see the value of that then go invest in a different industry!

  • Report this Comment On August 26, 2014, at 5:03 PM, HectorLemans wrote:

    PurgatorialFlame

    I fail to see why they need to spend $2b to do that. If it's that important to know exactly where people's eyeballs are pointed, they could spend a few million to collect data on a random sample of FB users. Believe it or not, you don't have to monitor every single user to get statistically significant data - just ask Gallup Inc.

  • Report this Comment On August 27, 2014, at 7:22 AM, Hammilton wrote:

    I think Facebook is looking big picture with this acquisition. Think about it, what is Facebook? It's a giant community of people interacting with each other. Consider how they had Ready Player One author Ernest Cline beta test the devices, on at least two occasions. I think Facebook is experimenting with possibly reinventing, not just itself, but the way we interact online, away from boring www-based experience and into some sort of Facebook-ified MMORPG. World of Warcraft meets Second Life meets old Facebook. People need to be eased into major changes, and Facebook has the ability to do it, and with their billions of dollars and hundreds of millions of users can make it happen. I think Zuckerberg wants to leave behind a bigger legacy than he already has, and being the guy who finally makes virtual reality a daily feature in our lives would cement him in history, as the guy who changed how we live, not some footnote as the founder of some company.

  • Report this Comment On August 27, 2014, at 4:32 PM, bkydcmpr wrote:

    get statistically significant data like gallup is old school, it's not even close to clicking data. clicking data is being used in the "precisely targeted market" which it's not possible by using the old statistics, I can see it's thousands times more efficient. vr is taking the whole thing to the next level.

  • Report this Comment On August 29, 2014, at 2:02 PM, HectorLemans wrote:

    "Clicking data"? I don't recall hearing about that in my college statistics class. Must be some sort of advanced concept introduced graduate school.

    /more sarcasm

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