This threw me. Facebook last week paid $2 Billion (mainly in Facebook stock) to buy Oculus VR, the designers of the Virtual Reality “Oculus Rift” headset.
A few weeks ago, Facebook paid $19 Billion for mobile SMS app producer “WhatsApp“, produced by a 50 head company of the same name and who have accumulated 400 million users worldwide, 70% of whom use their service daily. Traditionally, Facebook have derived their income from posting advertising in and around your personalised news feed. WhatsApp instead ask for an annual $1 subscription to use their service – which friends (or I guess brands) can afford to contribute to in the future. They also have a future aim to facilitate mobile payments using this messaging platform – a big asset to Facebook if they pull it off.
The big departure for Facebook is that the CEO of WhatsApp – Jan Koum – is legendary for being anti-advertising. I have sympathy with his view given mobile phone use experiences when you’re trying to do a specific simple task, and smack in the middle of the process flow, up jumps an advert. Complete pain in the butt, much like a kiddy at home jumping up and down in front of the telly when you’re trying to watch something.
For me, the impressive thing was that Mark Zuckerberg (CEO of Facebook) put Jan Koum straight onto his Board of Directors. Someone willing to disrupt the very business model on which the company has so far been based, and to avoid the malaise of many other organisations who otherwise cling onto a way of working doggedly, long after a decline of fortunes sets in. I thought it was such an impressive thing to do, I went and bought a stack of Facebook shares at $69 each for my “long term buy and hold” self invested pension fund, joining the likes of Google, Amazon, Apple and Tableau Software there. At least alongside the other 70% of the fund sitting in index tracker funds.
Then, the $2Bn bolt out of the blue. Suddenly, the “person to person” comms path (which I thought they had mapped toward their future self) headed straight into heavy fog. The current chief demographic of users of these headsets is to gamers, in my mind teen to 25 year olds who spend many hours every week in play; it is not the sort of hardware I can imagine someone older playing Candy Crush Saga or conventional board games on. Maybe Minecraft – but oops, Notch (the original author of Minecraft and an earlier contributor to the Kickstarter fund that bought Oculus to life) downed tools the second he heard Facebook had bought the company. With that, I started looking to what Mark Zuckerberg’s articulated thought process was, and to what the various industry commentators (who I respect) thought.
I think it would be fair to say that they are as confused as I am. The more outlandish claims related to his thirst to be the destination of eyeballs everywhere, and hence the ultimate future media mogul; helping deliver immersive experiences that finally send the already dismembering newspaper industry into it’s ultimate oblivion. Since the dawn of the Internet, the readership of newspapers has been heading towards OAP land relentlessly, and ads/classified revenue depleting, for many years now.
Journalistic endeavour is also already showing signs of radical all-or-nothing network effects. My own media consumption is a based on a collection of famous subject experts or specific writers, aided and abetted by a weekly diet of specific newsletters, podcasts and feeds from five social media streams. And the latter are getting progressively worse at communicating “signal” effectively, while throwing up increasing volumes of useless “noise”.
Of the five social feeds I get, it no longer surprises me that Twitter only has 1/8 of the number of registrants once recruited still using it’s service. Or that I miss updates from people I know who change employers on LinkedIn, lost in a deluge of an amateur attempt to become a business persons Huffington Post. Facebook selects it’s own subset of what it thinks I want to hear, and Google Plus has no way to restrict viewing to what i’ve not seen before. Even VAX Notes got that right with it’s SINCE key (you could skip between forum posts – onto replies on the next post you hadn’t seen yet – with a single button press). Likewise on Reddit.
So, while the Newspaper industry meanders, promoting the interests in the UK of six owners above all else – and doing little else than keeping printing presses employed with high volumes of useless twaddle, Political Party PR ruses and manufactured scare propaganda, plus visual “click bait” – I don’t see Oculus Virtual Reality headsets as the thing that will finally put them out of their own misery.
It’s a different contrast to Google with Google Now. If I move around in the real world, I can walk past a bus stop and it will flash up the matching bus timetable, plus next due bus eta. If it knows I need to get to a meeting elsewhere and the traffic conditions worsen, it’ll advise me to leave earlier, or to plan to take me via a different route. It tells me if a package is on it’s way to my work or home. The experiences are to supplement my travel and locations as I move around in the real world.
With this acquisition, Facebook, in contrast, send me in this case into a closed, virtual world. While the screen hardware is very impressive and a gaming experience very immersive, i’ve still not worked out how it translates to an effective new use case of Facebook – or a component of it – for a future me. More a return to the world of Linden Labs, and that of Second Life.
All that said, Mark Zuckerberg has so far pulled rabbits out of the hat to keep proving doubters wrong. This latest move is quite a challenge to join the dots on, and to convince everyone that it’s instead a prescient and visionary move. Or have I missed something fundamental? Comments most welcome.