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POV: Oculus Rift

MINDSHARE POINT OF VIEW - Facebook confounded the industry with its unexpected purchase of virtual reality startup Oculus VR for $2 billion. It stands in stark contrast to other recent technology acquisitions, such as WhatsApp and Nest. There is no obvious marketing application, no instant access to an established user base, no hidden trove of patents. Instead, Facebook is finally using its riches to help realize Mark Zuckerberg’s idealized future in which people can “experience the impossible.” And they couldn’t have picked a better place to start.

Details/Implications. Facebook’s IPO afforded it the luxury to make bold acquisitions such as this one. But its newfound position as a publicly-traded technology titan also brought its future under scrutiny. Facebook has acted with its purchase of WhatsApp and its failed bid for Snapchat. Those acquisitions collected headlines, but arguably lacked vision, and for some exposed some scrambling to quell concerns over its ability to maintain relevance within a fickle teenage demographic. The purchase of Oculus foreshadows a different Facebook, a more confident Facebook, one prepared to boldly move beyond its roots to deliver on Zuckerberg’s vision.

It isn’t clear where Facebook will go first with Oculus. Initial predictions range from monetized gaming to virtual reality “hangouts,” but both would require Facebook to develop well outside of its comfort zone. Indeed, it is folly to predict the future of Oculus, because its future does not lie in the hands of Facebook. Rather, it lies with a community of tens of thousands of developers and hardware startups who see its potential as a medium for their visions. Already, those visions are spectacular, e.g., simulated skydiving, tactile response and treadmills that let you physically walk in virtual worlds. Facebook are now a key part of this innovative sandbox.

In one sense, the closest parallel to the Oculus acquisition may not be a hardware startup like Nest, but instead an open community such as YouTube. In much the same way that Google receives credit for the innovation and content development which happens on YouTube, Facebook can grow its brand simply by fostering an environment that is conducive to innovation. As this community grows, Facebook gains access to more content, more data and ultimately more advertising revenue.

Summary.  For advertisers, the Oculus ecosystem is a new frontier, and Facebook’s acquisition heralds the start of a gold rush. The easy thing to do is to sit back and wait until Facebook identifies the quickest paths to monetization. But realistically, traditional advertising opportunities on Oculus are years away. Forward-thinking companies should become the innovators, not wait for them. The possibilities for proprietary development are enormous: virtual showrooms, remote tours, customizable environments. Virtual reality is the most immersive experience available to developers today, and thanks to the vision of Oculus and the deep pockets of Facebook, consumers are finally ready to experience the impossible.