When Facebook (NASDAQ:FB) acquired Oculus for $3 billion in 2014, the company made some promises to the company's founders and users. The biggest one Oculus founder Luckey Palmer highlighted was that he was promised by Facebook that users wouldn't need a Facebook account to use the Oculus Rift (the online headset in development at the time).
Palmer is long gone from Facebook, and any promises the company made about requiring Facebook accounts are gone too. Like it or not, Facebook is in full control of Oculus.
Oculus is now Facebook
The notable change Oculus made in the last few weeks was requiring users to have a Facebook account to log in to Oculus devices. This is key because the company just launched the Quest 2, an updated mobile headset, which Oculus thinks will drive a new generation of users.
Not only is Oculus requiring a Facebook account to use Oculus headsets, it's pushing its social network into virtual reality (VR). Facebook Horizon is a new social experience the company is already pushing hard, even though it's only in beta. Users can play games with friends, create new worlds, and even collaborate with friends and co-workers.
The integration of Oculus into Facebook brings together different platforms, for better or worse. And it's not without drama in the VR community.
A strange new world
The challenge for Oculus, developers, and users comes when a device is used outside of a small scope of one user and one Facebook account. The company has already angered some users by blocking Facebook accounts for users having more than one headset in a single home.
Even an Oculus Rift and a new Quest 2 can't be used at the same time without potentially getting flagged, and for users who have more than one headset in a home and only want to sign in to one account, that's a problem. For example, I have three different Oculus headsets at home and it's possible I could get flagged if we're using more than one at once. The problem is, customers with more than one device are Oculus' most loyal customers and ardent supporters.
Businesses present a different challenge. Oculus has a business program that starts at $800 for a headset, but that includes software tools built for large, custom deployments. A business customer with a few headsets who wants to use sideloaded content (a way to get content onto the headset outside of the official Oculus store) for an architecture project or for conferencing virtually with co-workers could get blocked if they use a single personal account. And the price tag difference of $800 for the business edition versus $300 for the consumer edition is hefty for a lot of users.
There are kinks to work out in Oculus' new world of Facebook accounts. Right now, Facebook seems to think it can sell headsets to consumers at a breakeven margin, or even a loss, and make it up through software sales and data it gathers on users through Facebook accounts. But users just want to use VR content, and the tie to Facebook is a hindrance. Eventually, something has got to give.
Where does Oculus go from here?
It's not uncommon for companies to have challenges determining the right strategy for accounts as new services come out. What's unique for a tech stock like Facebook is that it's tying an entirely unrelated social network to a new technology and hardware product at Oculus.
The friction in combining the two is already creating headaches for VR users, and with the holiday season coming up, Oculus needs to figure out how restrictive it's going to be for what will likely be one of the hottest gift items of the year.