| Facebook is not trying to build a premium VR business w/margins akin to Apple, that would be completely inverse to their business strategy. Facebook is much more akin to Google than to Apple because Facebook & Google's primary business is the same - advertising. And if you're an advertising business your primary objective is driving more eyeballs / more users. Google's first VR solution demonstrates this - they GIVE it away via Cardboard. Just look at how Facebook approaches the GearVR initiative - I can't imagine they're making much of a licensing premium but it's dramatically increasing their footprint to be the premier VR solution of Samsung phones (1) Which is where I come back to why bother with the hardware side as a serious business at all? Even if I argue that the Oculus Rift is just a red herring to push the medium forward on the hardware side I lose the thread because they seem to be playing such hard defense on the hardware side w/the "app" store . . . Just release FB Social VR already and win the game, stop damaging your brand w/consumers and developers . . . (1) http://fortune.com/2016/05/11/oculus-samsung-gear-1-million-... |
I saw facebook's earnings last quarter and my jaw dropped. 40% increase in revenue since same quarter last year. Then I took a look at their quarterly report, and the entire thing -- and I mean, like 99% of it -- is about ads. MAU, DAU, publisher and inventory growth, top-level organizational goals about getting more marketers on the platform, etc. The only other two revenue sources they have are hardware sales and payments, and they didn't even break out how much either of those businesses made apart from the broader facebook advertising business. It became extremely clear reading the report that ads is where the focus, attention, and money are going in the company.
I guess Oculus is going to be a giant ad business. Either that, or fb is going to pull off a major win against the innovator's dilemma, where they get so focused on ads that that focus chokes other initiatives within the company.
I don't doubt Oculus (as well as Messenger) have a ton of ad inventory in front of them. But I think it's a mistake to think fb cares about the hardware per se; they don't, it's all just a doorway to their platform.