One year ago, Oculus founder Palmer Luckey told me that his virtual reality headset company had no intention to sell. He said that the team had agreed, for the time being, to stay independent — to make sure that it didn't have to cater to another company's business strategy in order to further its goals. When Oculus raised $100 million in funding, it seemed that independence was assured, even though the company picked up a few new bosses along the way. But today, Facebook bought Oculus for $2 billion, including $400 million in cash.
If Oculus already had enough money to launch its consumer virtual reality platform, why would it sell to Mark Zuckerberg? We just asked Oculus CEO Brendan Iribe and founder Palmer Luckey that very question. Luckey says that Facebook will not only allow Oculus to stay independent, but that it will also provide the resources to design and produce components purpose-built for virtual reality hardware. Though originally, Oculus piggybacked on the low cost of commodity components built for smartphones, Luckey says that won't necessarily fly from here on out. "Great virtual reality has different requirements than great cellphones," says the founder. "This is going to let us do things that would have just been far and away impossible without Facebook."
You can read our full conversation with Luckey and Iribe below.
Why did you decide to do this? Did Sony's announcement spur a deal?
Oculus CEO Brendan Iribe: We've been working on this relationship for a while. It really started with us just getting to know Mark and his team: they were interested to see a demo, they came down, we showed them a demo, we started talking about the vision, and they got excited.
"They believe in our vision of virtual reality."
Basically, Mark said, "Is there any way we can help, is there anything we can do? Any kind of partnership, anything we could invest in or promote? How can we be a part of this and help make virtual reality even bigger and even better?" After meeting and talking and hanging out a lot, we started to get to know each other, we started to trust each other, we started to tell Mark and his team more about the future and how we saw this impacting the world, and how big an impact it could be, and how we were really focused on hiring the very best people in the world... and ultimately how we wanted to get out the hardware to as many people as we could, as fast as we could, at the most affordable price.
As we went down that path, Mark said, "I think we really could help you on that side of it. You clearly know what you're doing on gaming, we don't need to have any real impact on that, but I think we could help you on some other parts." And that's where the discussion went. Oculus is all about the gaming community right now, we're super focused on that. But with this acquisition and with this partnership, we can now get the virtual reality platform out to more people faster, better, and at a lower cost.
You had $100 million in funding, and a year ago Palmer told me that the company wanted to be independent. What did you need from Facebook that would be worth changing that? What are you getting from Facebook that could make this happen any differently than you could with $100 million in funding?
Oculus founder Palmer Luckey: They believe in our vision of virtual reality. There are so many other companies that have been interested, they have a vision of what they wanted to do to fit into our product roadmap, and if they bought us it would be so that we could build what they wanted us to build. Mark does believe in our vision of virtual reality, and we're going to continue operating independently, delivering what we've always wanted to deliver. This gives us a lot of resources to do what we've always wanted to do, but it doesn't change what we want to do.
What tangible benefit was there to signing on with Mark Zuckerberg and Facebook right now — something that you couldn't do with $100 million in funding?
Iribe: When you look at this and where it's all going, the hardware business requires a lot of investment. It's very hard, it's very expensive, and ramping up hard on any given platform, whether it's a console or any kind of PC or mobile device, going into the hardware business requires a lot of investment. We had a lot of investment, and that was great, but at this point, we're looking at scaling this, at going out and acquiring components, and doing deals with some of the biggest companies in the world that got behind us and were working with us so that — because they believed in it and they wanted to, and in many ways they were trying to give us the benefit of the doubt, and almost bend the rules on how much of a commitment they normally require from companies.
Now we're able to show up and say "Hey guys, not only are we in this for a very long time, and the risk is a lot lower that we're going to go away or have any financial problems, but we're now ready to step up and actually put in bigger orders and bigger commitments, and hit bigger volumes around where virtual reality can go." I think that's a key part of it.
"Great virtual reality has different technical requirements than great cellphones."
Luckey: Another thing to keep in mind is that up until now, we've largely been driven by the mobile phone market, most of the hardware we've been using is out of the mobile phone market. But as virtual reality gets more and more advanced, the right thing to do is develop hardware that's made specifically for virtual reality.
Great virtual reality has different technical requirements than great cellphones, and like Brendan said, the hardware business is really, really expensive. Designing new display technologies is really, really expensive. This is going to let us do things that would have just been far and away impossible without Facebook. We want to deliver the best possible product, at the lowest possible cost, and this was clearly a panacea to do that.
So does this change your roadmap? Does this mean the headset will come any quicker, or any cheaper, or be any better in any particular way than it would have been previously?
Luckey: This does let the headset be better and cheaper. Our roadmap is about the same as it's always been, but there are a lot of things we'd wanted to do that now we can really execute on. This does make the Rift cheaper and better, both in the near term and the long term.
Another thing is that we're going to be able to devote a lot of resources to content that we would not have been able to do otherwise. Virtual reality is a tough sell for a software developer. They have to convince investors that not only are they going to build a good game, which is what they normally have to do, they have to convince them that it's going to be a good game and that virtual reality will be successful. This puts us in a position where we can invest in games because we know virtual reality is going to be successful; we just have to believe in the game.
You're going to see a lot more coming out of our content investment and publishing side.
Is there now a long-term plan to develop a virtual reality platform with Facebook itself?
"We're a rocket, and we just attached ourselves to an even bigger rocket."
Iribe: We can't comment on any announcements right now besides this partnership, but I think that you'll see the announcements we make in the future, literally they're going to be bigger, better, and faster, and we're incredibly excited to go into this new world of virtual reality with one of the biggest, fastest growing companies of all time. That's why we did this deal. We're a rocket, and we just attached ourselves to an even bigger rocket to get it out there and deliver a better virtual reality experience to the world.