Facebook Teases Oculus Rift Announcement (FB)

We could finally learn be the release date and pricing details

When it comes to launching new tech hardware, the more drama, the better. Companies like Apple (AAPL) have mastered the art form, and now it seems Facebook (FB) is taking some pointers.

FB OculusFacebook is planning to make a “special announcement” at the Game Awards on Thursday about its virtual reality product, called Oculus Rift.

What could it mean?

Well, of course, it’s all about generating buzz. Yet it seems that the consensus is that FB will announce the release date and perhaps the pricing for the Oculus Rift. (So far, we’ve only been told that the Oculus Rift should hit the markets sometime in early 2016.)

The Oculus Rift has taken a circuitous route to its launch. The technology is the brainchild of Palmer Luckey, who built a prototype in early 2012 in his parents’ garage when he was just 17 years old. He then put together a Kickstarter campaign and raised a quick $2.4 million. No doubt, this caught the attention of Silicon Valley investors, who invested substantial amounts in the fledgling startup.

But of course, the real excitement came in March 2014 when FB CEO Mark Zuckerberg tried the Oculus Rift. He was blown away and decided to shell out a cool $2 billion for the company.

At the time, the decision seemed kind of rash. But Zuckerberg has struck some smart deals over the years, including Instagram and WhatsApp, which have helped to propel FB stock.

The Reason FB Went After Oculus

So, why make a play for VR? In Zuckerberg’s words:

“When you put [the Oculus Rift device] on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you’re actually present in another place with other people. People who try it say it’s different from anything they’ve ever experienced in their lives.”

Zuckerberg sees immediate opportunity in the gaming market. But eventually, there is likely to be use cases for viewing live content, such as sports, or person-to-person communication. In other words, social networking may go VR.

This is certainly a great vision but there will be major hurdles along the way. Let’s face it, the hardware business is extremely tough to succeed in. Even top-notch tech companies have failed, as seen with Google’s (GOOG, GOOGL) disastrous Glass technology.

Another big issue, of course, is getting enough content. If anything, this is especially problematic for VR since its real value comes from immersive experiences, which aren’t exactly cheap to produce.

And don’t expect most consumers to immediately jump on board with the technology. Some of the reasons for concern include the pricing (which could be more than $1,500), the potential for motion sickness and the dork factor — just imagine what you’ll look like with a bulky Oculus Rift sitting on your noggin.

At the same time, you should never discount competition, with rivals like Sony (SNE), Google, Samsung, Microsoft (MSFT) and GoPro (GRPO).

Even Zuckerberg is playing down expectations. During the most recent earnings call for FB, he said: “It’s important also to recognize that this is going to grow slowly, like computers and mobile phones when they first arrived. So we’re committed to Oculus and virtual reality for the long-term.”

In other words, for investors looking at FB stock, the Oculus Rift isn’t likely not to be a significant factor in short term. But the investment does make sense as it seems inevitable that online experiences will get increasingly more realistic. And by making investments now — before everyone else is clamoring for position — FB should be in a much better position to benefit.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/12/fb-oculus-rift-facebook-announcment/.

©2020 InvestorPlace Media, LLC