Right now the guys behind the Oculus Rift virtual reality gaming headset are probably at the tail-end of an epic celebration. Think about it, if you were bought out by Facebook for US$2-billion would you mark the day with a mug of hot chocolate in front of the TV? No? Us neither.
Facebook’s probably feeling pretty chuffed with itself too. It’s managed to nab a company that’s been grabbing all kinds of headlines over the past few months. Sure, it cost more than double what it paid for Instagram a couple of years ago. Unlike Instagram though, Oculus has a physical product that it can, eventually, sell.
That said, there are bound to be a few people who feel like the deal’s screwed them over. Oculus Rift is, after all, a crowdfunded project and there are bound to be a good few people who threw their money at it and now feel betrayed.
That is however just a taste of the winners and losers in this massive deal.
This one’s fairly obvious, especially if you’re of the thinking that if someone offers you billions of dollars, you don’t turn them down. Oculus Rift only started asking for donations on Kickstarter in August 2012. That effectively means it’s gone from zero to a two-billion dollar company in under two years. That’s completely and utterly mental. Even more insane is that the deal took place over just five days and Mark Zuckerberg had tried out the product only once.
Facebook (for now)
Right now, Facebook has one of the hottest properties in tech. Sure, buying company whose product hasn’t reached the public yet is a gamble, but its success on Kickstarter — 5 642 people paid US$300 for the promise of an early “developer kit” (including developer tools and a prototype of the device) — shows that there is an appetite for the Oculus Rift.
Sure, the device’s association with Facebook might spoil it for some but chances are the vast majority of the general public won’t care. If Facebook can lure top development talent into building games for the Oculus Rift, then the ability to have a central log-in might actually serve it well.
Oculus Rift’s VC bakcers
Most of the headlines around the Oculus Rift, Facebook deal have focused on the VR headset’s Kickstarter credentials, but it’s worth remembering that the company also has VC backers. Spark Capital and Matrix Partners, which led the company’s US$16-million Series A round, and Andreessen Horowitz, which led the US$75-million B round, both have similar stakes in the company. For the Series A funders in particular, this is a massive win and one that they probably wouldn’t have been expecting to get so quickly.
Look, Kickstarter doesn’t need to prove its viability any more than it already has, but a deal of this magnitude sure as heck doesn’t hurt.
Regardless of how correct you feel his position on Facebook is, you have to admire Minecraft creator Markus Persson (aka Notch) for sticking to his guns and cancelling the Oculus VR version of his game upon learning about the Facebook deal.
We were in talks about maybe bringing a version of Minecraft to Oculus. I just cancelled that deal. Facebook creeps me out.
— Markus Persson (@notch) March 25, 2014
Still, having to pull what would’ve been a headline project for both companies must come as something of a blow for Persson.
Microsoft and Sony
At least that’s what Mark Zuckerberg would have you believe. In a conference call following the announcement, the hoodied one said that Microsoft and Sony simply won’t be able to cope in the face of competition from Oculus Rift:
What we’ve seen is the Oculus product that they have now is way ahead of anything else that’s out there. Sony, I think, has demo’d something very early. Microsoft hasn’t even gotten to the point where they have anything to demo yet. Not only that but the team is way ahead in terms of just having so many talented people at Oculus, that we feel good about that.
In order to build a really big computing platform, there are a bunch of important use cases that you need to support. … We’ve measured this more with mobile, but what we see is that about 40 percent of the time that people spend overall is in gaming. And about 40% is also spent in social communications. About half of that is in Facebook, which is nice.
What we basically believe is that unlike the Microsoft or Sony pure console strategies, if you want to make this a real computing platform, you need to fuse both of those things together.
Oculus Rift’s Kickstarter backers
As we’ve already noted, a fair few Oculus Rift backers are going to be irritated that it’s “sold out” to Facebook. They would’ve wanted the company to remain independent forever, somehow supplying all their needs at the same time. But that’s not what this entry is about.
As the Wall Street Journal points out, Oculus Rift’s various Kickstarter backers pumped US$2.4-million into the company for zero equity. In return, they got thank yous, T-shirts and (for the top donors) the promise of a prototype we spoke about earlier. Put that money into the hands of a single investor or even a small fund and they would most likely laugh at returns like those.