In January I wrote a post on gaming advancements on the horizon, and thanks to Facebook it looks like virtual reality has taken a step forward. Mark Zuckerberg must think virtual reality is the future of gaming and perhaps other applications, spending 2 billion on startup Oculus Rift.
I am a big fan of the future of virtual reality, but I can’t see how Oculus Rift justifies a 2 billion valuation. The good news for non Facebook shareholders though is this will spur even more research and advancement into virtual reality because it can attract big money. One reason I don’t think the valuation is justified is Sony just introduced its own virtual reality headset for the Playstation. So the Oculus rift is not the only game in town, and the competitors are likely not far behind.
The biggest mystery is how Facebook will integrate virtual reality into it’s experience. If Facebook does want to pivot a bit and become the hub for a virtual reality community and game center – maybe Oculus Rift will be a bargain. It could be that Mark Zuckerberg is thinking a few moves ahead of everybody else.
One of the many interesting side stories here is the huge negative reaction from many of the KickStarter backers of Oculus Rift. Many are furious that they ‘sold out’ to Facebook after getting their original money through KickStarter. Some feel that the original goal of creating VR for games will now be a sideline to some general Facebook conspiracy to use VR for Facebook instead of gaming. Will this backlash be seen in future KickStarter campaigns because people are now more aware that their backing of projects may just promote wealth in the individuals with these ideas and that the original intent of their backing may not be in the final result with large companies purchasing these projects for their own agendas?
My thoughts on Kickstarter is you should be aware your are buying a product not investing in a company. Perhaps because of all the startups in Kickstarter that people feel they are investing equity in a company. Lets face it – everybody who has a kickstarter project is hoping for a 2 billion dollar payout. It would be interesting precendent for the Rift guys to donate 1 million to the backers – or some other bonus. I agree this could be sign that Kickstarter has peaked, and it has lost its innocence.
I have read that Kickstarter legally prevents payouts to backers. My first thought was that that Kickstarter will no longer be used as a good funding source for technology innovation while other projects such as movies and video games might continue to do well. However…what if a funded movie or game becomes so popular that the ‘franchise’ gets sold to a large company? I can see a HUGE negative reaction to certain game companies getting rights to Kickstarter funded games. You may be right about the peak having been reached. I should not be surprised but I am a bit saddened by this turn of events.