Facebook Acquiring Oculus Rift Wasn’t The Greatest Thing, Says Investor
(Last Updated On: July 20, 2016)

Venture capitalist Mitch Lasky, offered his opinions about the current state of virtual reality at the Casual Connect USA convention. The investor has been at the forefront of a lot of emerging and disruptive technologies over the past two decades and he wasn’t completely won over with the current media frenzy over virtual reality headsets.

GamesIndustry.biz captured some quotes from Lasky, who has invested in mobile before it was huge, Riot Games before they were bought out by Tencent, and Snapchat before it went global. According to the venture capitalist, he states…

“When I look at it more structurally, I’d say something that may sound a little strange: perhaps the Facebook acquisition of Oculus wasn’t the greatest thing for the development of virtual reality in the long-run,” […] “It set such a high watermark, and it rung the bell so loudly for the industry, that it sort of forced the hand”

It’s true what he’s saying.

A lot of developers and a lot of investors poured into the VR market before it even showed signs of being financially viable in the long run. So far, there has yet to be a VR app that has rocked the market. Most of the sales in VR are for the GearVR, a cheap $99 headset, and it seems to be used for porn more than gaming, virtual tourism or edutainment. Even then the GearVR has only managed a total of a million units being moved, but not much activity has followed with any specific software app, as reported by Fortune.

Lasky went on to say…

“A lot of game developers jumped in, a lot of venture capitalists jumped in. It’s a dramatically overfunded space, actually, from a VC perspective.”

Not just from a venture capitalist perspective, but from a consumer perspective as well.

The HTC Vive and Oculus Rift have both covered headlines from top to bottom across the web but neither has a killer app, despite both costing almost as much as a high-end PC.

Two of the best selling VR exclusive products for the Vive and Rift on Steam is Destinations and Eclipse: Defending The Mortherland. However, according to Steam Spy, both products have managed to move less than 40,000 units since their respective releases in May and June… and they’re free.

Lasky makes a good point about VR being talked up a lot by people who don’t understand the technology, claiming it’s going to be huge but not understanding why or how….

“ [They say it’s] “gonna work, it’s gonna be huge, it’s the next big thing, the next big platform. I’ve talked to senior executives at Facebook who’ve told me that it’s the next mobile phone. I don’t personally share that view.

 

“[…] the market is so nascent that we haven’t even figured out what we want to do with it yet. It kind of scares me as an investor.”

Lasky isn’t alone in that view. Market research analysts have been quietly and slowly changing their tune on VR. On two separate occasions Superdata Research has lowered their VR revenue forecasts by a total of 52% this year. First they lowered it by 30% in March, and then by 22% in April.

I think slowly but surely the market heads are starting to realize that there’s a real lack of incentive for consumers to go out pay $799 for a high-end VR headset, and the only thing compelling them to get the $99 headsets is porn.

Lasky also wasn’t impressed with the current crop of apps available, stating…

“I’ve seen 25 or 30 excellent demos. I haven’t seen a lot I would consider finished products, or even things that suggest finished products. And if it’s anything like mobile games, I started a mobile games business in 2000. It wasn’t until 2008 or 2009 that they really became viable as big businesses.”

Many gamers and even VR enthusiasts will admit that most of everything out there does feel like a tech demo instead of a finished product that really engages or makes great use of VR.

Wedbush Morgan Securities analyst Michael Pachter also shares a similar view as Mitch Lasky, noting that publisher profitability from the VR market is at least three to five years away. Some analysts believe that the PlayStation VR with its $399 price tag could be the key to the mainstream market when it launches this fall, but even then it still has a lot to prove with its limited library of mostly tech demos.

It will be fascinating to see how investors and publishers adjusts to VR as the slow uptake from consumers and the lack of worthwhile apps continues to become the unflinching reality for the virtual reality market.


Ads (learn more about our advertising policies here)



About

Billy has been rustling Jimmies for years covering video games, technology and digital trends within the electronics entertainment space. The GJP cried and their tears became his milkshake. Need to get in touch? Try the Contact Page.

  • C G Saturation

    Facebook acquiring Oculus was a huge warning bell to me that VR – especially Oculus VR – would end up sucking huge balls. So far, as far as I’m concerned, it seems to be heading in that direction.

    I was already looking into HMD and Kinect stuff long before Oculus VR, and it doesn’t seem much different from back then. I think VR is only really a more immersive alternative to monitors/screens/TVs. I can’t imagine it offering much more in terms of gameplay, that hasn’t already been done in similar fashion.

    If there’s going to be a truly revolutionary step forward in gaming, it’ll probably have to be in terms of control. Like devices where you can control stuff with your mind. That opens up a lot of possibilities. I can’t imagine VR headsets doing that on their own.

    • LurkerJK

      Simulating interaction and movement on regular monitors is easy, push the lever to walk, press F to pay respects

      Simulating them in VR is a completely different thing, the brain expects feedback to every action, it NEEDS it or all the alarms start ringing and you feel sick

      In terms of gameplay VR will always be more limited until you have some complicated mix of touch simulating electrodes with an unidirectional treadmill (which sounds terribly expensive) or a way to directly tap into the brain and insert signals to simulate the feedback (which sounds all kinds of dangerous)

      They fucked up spearheading the VR generation with gaming, the tech is not there yet because there is no market to invest in them

      I thought the Facebook thing was a good idea initially, i thought they would push the “watching sports, recitals, theater plays, political rallies or other “live” events as you are sitting in the best place of the arena/being able to change point of view” business immediately but afaik they havent done anything, too busy censoring conservatives probably

      • VR will always be more limited until you have some complicated mix of touch simulating electrodes with an unidirectional treadmill

        The Omni-Treadmill exists for this express purpose. It’s a bit bulky and clunky and costs about the same as an Oculus Rift, but it does appear to function as intended.

        The hand-controls are a bit more of a problem because we’re still using crude Wii-mote style motion controls, which vastly limit what you can do and how you can do it. They’ll need to create 3D motion-sensor gloves that you can wear so it will be a lot more precise, but those are probably quite a ways off from release.

        • C G Saturation

          I personally believe the future of gaming is influencing people while they’re in a dream-like state. No idea if that can be done effectively, though. It’d probably end up relying too much on the individual.

          • LurkerJK

            I know there have been some advancements reading brain signals, the thing is that once you start inserting signals into the brain those crazy Japanese animes where someone hacks the mmo and burns your brain if you die in-game start to sound eerily real

          • C G Saturation

            Yeah, people can move stuff with their brain to some degree. I’m thinking that when people are in a dream-like state, and their senses are mostly turned off, you could influence them to believe they are moving without needing a treadmill or whatever. But I can’t imagine how you’d feed visual imagery into that state. My understanding is that the stuff we see in dreams comes from our memories.

            If we get to a point that they can influence a dream-like state effectively enough to mimic gaming, then we’d probably already be brainwashed via the same kind of technology. Because being an asshole always takes priority over recreational uses.

          • LurkerJK
        • LurkerJK

          Ha, I wanna see someone physically walk their way though Skyrim or Witcher 3, hope that treadmill is sweat proof

  • giygas

    It doesn’t help that Fecesbook was trying anti-competitive bullshit like bribing developers to make their games exclusive to the Oculus store. Jokes on them though, because they only ended up courting shovelware games.

    • That was idiotic, along with them pursuing DRM.

      First up, none of the exclusives on the Rift are good looking games. Not enough to buy a headset for.

      Second, gamers hate DRM. Why would you pursue the one thing that literally drives PC gamers to piracy?

      Absolutely idiotic.

    • LurkerJK

      They are not the only ones, Sony is doing it as well, many of the psVR demos are exclusive, i imagine HTC wont be far behind

      It would be in their better interest to pool their money together than fighting each other

      Remember how hard it was for Ebook readers to build up steam because of the obsession for DRMing everything to hell, it wasnt until Amazon made it easy that they became a thing, they need to build the business before they start destroying it

      • C G Saturation

        Yes, well they can all f**k off. I’m not interested in dealing with their bullshit.

  • Ghost

    I just think they really need some killer apps, and not more of the same crap but not super close to your face and with awkward controllers. I still think we need a really awesome MMO. All of this hype has been wasted on garbage used to cash in on the VR hype train.

    • C G Saturation

      You know deep down that any MMO they make will be ruined by stupid systems and microtransactions.

      Want simple black clothes? Gotta farm a billion things for a random chance to get a random thing to pay random money for a random dye that gives a random shade of a random color that requires extra money to reduce the change of randomly getting random stuff you randomly don’t randomly want.

      • Ghost

        Most likely. I don’t think we’ll be seeing any thing worthwhile for VR during this generation of VR. And who knows how long before someone’s willing to give it another go? I just hope that when that time comes, they have awesome software to match the potentially awesome hardware. Right now there’s just no incentive to invest in all of this costly tech, as impressive as some of it is. I see Youtubers trying different game’s and demo’s for different headsets, and all I can think is “That looks like shit. My N64 had more immersive and more entertaining stuff than that near thousand dollar in your face display”

  • LurkerJK

    It’s funny to see analysts now saying what the edgelords pessimists were saying before they released

    Imho VR gaming needs too much investment, the headsets cost too much, needs a pc too powerful and games are not even there because there is no market for them

    it would make more sense to create the market first with the spectating experiences idea and porn, oh yeah, no porn on the high profile headsets, nevermind, they are far more worried outdrming their competition than trying to provide good and easy to use content

    If they were smart they would team with each other to increase the content asap before they lose the hype drive (probably too late by now tho) working against each other

    • The hype is mostly gone at this point because most normies don’t care and most hardcore gamers aren’t going to stop buying good games to play tech demos on near $1k devices.

      The ONLY hope VR has now is the PlayStation VR. Outside of that it’ll only be a small, niche market for true VR enthusiasts and people using cheap headsets like GearVR for porn.

      • Grey

        Not even sure Sony VR could turn it around, unless they manage to put out some truly amazing and groundbreaking games for it. The things will cost nearly as much as the console itself, which isn’t exactly sweetening the deal.

        They really jumped the gun pushing VR, trying to sell it on hype before they even had the technology fully developed, to say nothing of producing anything worthwhile to actually do with it (outside of porn, which apparently a fair few won’t let you watch anyway, because heaven forbid people not be allowed to do what they want with their own property).

        • LurkerJK

          the whole VR strategy seems to be betting that someone somewhere will come up with a killer app, its not going to be the hardware makers, oh no, they are not going to invest that kind of money, someone else should do it

      • LurkerJK

        I have no hopes for Playstation VR, most of the line up are tech demos just like PC, the only one that said “whole game in VR for real!” was Resident evil 7 and that game is not looking that hot

        The fact they dialed back playstation 4.5 is seems to be heralding the shitstorm, if they plan releasing the headset with vintage ps4 the first impression is going to be HORRIBLE

      • C G Saturation

        I watched a PS VR presentation a while ago and it was very meh. So I’m not expecting much from them either. At least it’s not as expensive.