March 27 (Bloomberg) -- Facebook Inc. Chief Executive Officer Mark Zuckerberg hailed virtual reality as the “future of computing” when he unveiled an agreement to buy Oculus VR Inc. this week. Ubisoft SA isn’t so sure.
The French game developer, which makes titles such as “Assassin’s Creed,” has no plan to develop a product for Oculus’s virtual-reality headset. Lionel Raynaud, vice president of creative for Ubisoft, said he’s waiting to see sales success for the technology before he will divert resources from the company’s mobile and console efforts.
While virtual reality headsets are “exciting,” they “would need to sell at least 1 million units to be viable for development,” Raynaud said in an interview last week. Games have to be designed from the ground up for new platforms, he said, while mobile and console games share development tools that save time and money. Heather Pond, a spokeswoman for Ubisoft, said yesterday those plans haven’t changed.
Ubisoft’s approach to virtual reality, which is echoed by other top five game makers, underscores the hurdles Facebook faces in taking Oculus’s nascent technology and making it mainstream. Oculus only has a prototype of its headset, called Oculus Rift, and hasn’t set a date for rolling the product out. Even then, the device may not take off if developers don’t create games for it. The current version also requires users to be tethered to a personal computer, and consumers will have to adjust to wearing a gadget that blots out real-world situations.
Zuckerberg, who was criticized for shifting too slowly to mobile from desktop computers, may be betting too early this time that virtual reality will dominate as the trend might take another 20 years to materialize, said Brian Blau, an analyst at Gartner Inc. Blau worked in the virtual-reality gaming industry in the 1990s without seeing a consumer product succeed.
“Virtual reality technology has seemed imminent since at least the late 1980s,” he said. “I think Zuckerberg is being a little unrealistic with what he can do in the short term. We don’t really know how developers are going to take these really advanced tools with no technique and make them into something that consumers can use.”
Among the virtual-reality products that came and went were a developer kit called Cyberspace from Autodesk Inc. and Virtual Boy, a Nintendo Co. game console released in the U.S. in 1995, Blau said. Walt Disney Co. also got into the game in the 1990s with Disney Quest, an indoor interactive theme park. None were major consumer successes, though virtual reality has taken off for some military, medical and design needs, he said.
Tucker Bounds, a Facebook spokesman, declined to comment. The Menlo Park, California-based company is spending as much as $2.3 billion on Oculus, including cash, stock and additional payments tied to achieving certain milestones.
With the Facebook deal, Oculus plans to streamline its manufacturing process and supply chain to make a less-expensive and more mainstream device, Nate Mitchell, vice president of product at Oculus, said in an interview yesterday. While Oculus Rift is popular now with smaller, independent game developers, it will make sense over time for larger developers to take part, he said.
“I think there are a number of challenges still left to be solved before we get Oculus Rift to be a truly mainstream product,” he said. “With Facebook, we are actually looking at focusing a lot on growth.”
Mitchell compared the challenges to Google Inc.’s Android, before the mobile operating system had a big enough market share to convince developers to make applications. Now Android is prevalent, he said.
The deal has its fans. If Facebook manages to make Oculus Rift mainstream, it could branch out beyond hardcore gaming and into collaboration experiences, movies and chatting, said Cary Bran, a senior director of innovation and new ventures at Plantronics Inc. Plantronics designs and manufactures phone headsets and accessories.
“Things where it naturally lends itself to is this immersive entertainment experience,” Bran said in Tokyo at the Wearable Tech Expo. “Not just gaming, but movies, video chat would be amazing with that device. I think there are some social aspects of that that could be well-utilized by Facebook.”
William Hurley, a co-founder of software-development company Chaotic Moon Studios in Austin, Texas, has made games for the Rift that teach people how to build molecules and atoms and train for dangerous search-and-rescue missions. He remembers working on virtual reality in 1992 and thinks this time it’s different.
The price of accelerometers, gyroscopes and other components of a product like Oculus Rift has dropped to the point that the technology is affordable and works more smoothly, instead of giving motion sickness, said Hurley, who goes by “Whurley.”
“There are technologies that haven’t existed before that exist at a price point that makes sense,” he said. “That’s why now is the time. I’m not always a fan of some of Facebook’s acquisitions and I think this is one of the smarter ones.”
Other Facebook-loyal developers said they couldn’t see themselves fitting into Oculus’s future. King Digital Entertainment Plc, whose game “Candy Crush Saga” became popular on Facebook’s network, doesn’t anticipate Oculus will make virtual reality mainstream enough for its audience.
“When I think of virtual reality, it’s hard to see how it specifically applies to our core area of expertise, which is casual gaming,” King’s Chief Financial Officer Hope Cochran said in an interview. “It’s very apropos for console gaming or when you’re sitting in front of a TV, but I can’t see carrying a big headset around with you.”
Developers can currently build a game for the iPhone or Android-based devices inexpensively and sell to hundreds of millions of consumers who own smartphones. Facebook will need to run hackathons and bring Oculus Rift’s prices down below the price of a mobile phone for developers to experiment with it, said Jeffrey Hammond, an analyst at Forrester Research.
“Developers need to be able to dabble with the technology at a low cost,” Hammond said. “It’s expensive to build a VR game compared to other wearables and mobile, so it can’t be expensive to own the technology.”
The most recent Oculus Rift developer kit cost $350 to pre- order. That’s cheaper than Google’s Glass product, at $1,500, which lets people interact with their smartphones via head movements and commands to a pair of glasses. Zuckerberg has said he doesn’t plan to make a profit off sales of the Oculus device.
--With assistance from Aaron Clark in Tokyo.