Top-tier video game developers, your so-called Triple-A shops, aren’t wasting their time on creating the next GTA V or Mass Effect for Oculus Rift, the virtual reality headset start-up owned by Facebook. The customer pool isn’t deep enough to make such ambitious projects profitable yet, even though the technology exists. There’s no doubt that Oculus is impressive, but not enough people have it because there aren’t enough games. For there to be high-quality video games, there first needs to be widespread adoption of the technology — but it won’t be widely adopted until there’s high-quality content.
It’s a “chicken and egg” problem, Facebook founder and CEO Mark Zuckerberg says.
“I just think it’s going to be a ten-year thing,” he said on the call, noting it took “ten years to get to 1 billion units” for smartphones, after they were introduced in 2003. “I don’t think that there is really a strategy to pull this in from ten years to five,” he said of creating a VR content ecosystem.
“I don’t know if there was something that folks could have done to make that happen fast but I think that was pretty good,” Zuckerberg commented about the rise of smartphone adoption. “And if [Facebook] can be on a similar trajectory of anywhere near ten years for VR and [augmented reality], then I would feel very good about that.”
His comments on VR might have been the biggest Oculus news of the day if not for a massive ruling against Facebook in a Texas courtroom hours earlier. A jury in Dallas found that the Oculus co-founder, Palmer Luckey, had violated a non-disclosure agreement, and ruled that Facebook owed $500 million to ZeniMax, the VR company that filed the suit. (The judgment did not come up on the call with investment analysts.)
It’s clear that Zuckerberg is taking the long view on VR, though, and he said as much, asking for patience, and saying Facebook was planting seeds.
“I would ask for the patience of the investor community,” he said. “Because we’re going to invest a lot in this, and it’s not going to return or be really profitable for us for quite a while.”
Earlier, Zuckerberg reminded analysts that Facebook is astroturfing content creation for its VR tech. In October, Facebook announced it would spend $500 million — see that video above — on Oculus, which is good news for digital developers looking to make a business out of creating VR experiences. Turns out, that $500 million number was prophetic, just not in the way Zuckerberg thought it might be.