New World Notes

FTC Action Against Meta's Acquisition of Within Seems Poorly Placed When Meta is Losing Badly to Rec Room & VRChat

Above: Within's Supernatural on the Oculus store with nearly 10,000 user ratings

Fairly big bombshell just dropped:

The Federal Trade Commission on Wednesday filed for an injunction to block Meta, the company formerly known as Facebook, from buying a virtual reality company called Within [producer of the highly popular fitness app called Supernatural], potentially limiting the company’s push into the so-called metaverse and signaling a shift in how the agency is approaching tech deals... John Newman, the deputy director of the F.T.C.’s Bureau of Competition, said the agency acted on the Within deal because Meta was “trying to buy its way to the top.” The company already owned a best-selling virtual reality fitness app, he said, but then chose to acquire Within’s Supernatural app “to buy market position.” He called the deal “an illegal acquisition, and we will pursue all appropriate relief.”

Maybe I'm missing something, but Within's Supernatural is nowhere near "the top", even in the Quest 2's ecosystem of some 10-12 million headsets. With nearly 10,000 user ratings in the Oculus store, Supernatural likely has usage in the six figures.

That's not nothing, but claiming that's "the top" misses the big picture: Meta is currently losing the platform war on its own platform. Compare Supernatural's usage with numbers announced by the metaverse platform Rec Room last April:

Watch: Veteran VR Enthusiast Compares Oculus Custom Homes to Sansar

Oculus/Facebook recently introduced Oculus Home User Created Spaces, and longtime VR enthusiast/creator David Hall just shot this impressive walkthrough -- "Homes" is a bit of a misnomer, because as you'll see, it's powerful enough to create a whole mini-world. (Though as Oculus' specs say, only "250 meter cube centered on your home will be navigable"). Fortunately for us, David was featured in the original promo videos for Linden Lab's Sansar (watch below), so he's the perfect person to compare and contrast it with Oculus Homes:

"So there is still a good bit about what Facebook is doing that I don't know," he says. "I have been in Sansar for a couple years and they have come a long way.  I like the workflow a bit better in Homes, I like what Facebook is doing with the inventory system and giving people loot boxes.  I love the high quality interactive items you can get in Homes, like the bow and the laser gun.  Sansar has kind of leaned pretty heavily on the community to create these things and you get varying levels of quality and varying degrees of understanding about the  capabilities of the platform."

On the other side of the ledger, Sansar has more robust features (at least now):

Expectations of Rapid, Mass Market Adoption of Virtual Reality Based on Distorted Forecasts, Facebook’s $2 Billion Buy-In, Suggest Insiders

While Gartner and other analysts predict rapid, mass market adoption of VR, many of the actual VCs who’ve invested in virtual reality, not to mention executives now working on consumer level VR products, aren’t at all convinced this is the case. That’s my impression after recently talking with some insiders involved in VR at the major company level.

“I have done fireside chats with VC firms, private dinners, consulting meetings— they don't believe the numbers from analysts,” as one of them tells me. “But they are are all scared of missing out so…”

A key reason VCs are scared to miss investing in VR is Facebook’s $2 billion purchase of Oculus Rift in 2014. Back then, it seemed like a sure sign to many that virtual reality was destined for immediate mainstream growth. But for some in the industry, Facebook’s high purchase price of an unproven technology in an as-yet untested market just created more uncertainty and confusion.

“The two billion fucked everything up — it made us question jumping in,” one insider puts it. “That distorted the market. We weren't alone in thinking it — it gave everyone doing real work pause.”   

You can see this pause from executives actually trying to sell VR products to consumers. Eve Online head Hilmar Veigar Pétursson was a major booster of virtual reality a couple years ago, but just released a non-VR version of his company's tentpole VR brand. Unity CEO John Riccitiello is more blunt, calling the short term period we’re in the “gap of disappointment” for VR:

The original version was a talk I gave 16 or 17 months ago. I pointed out that a bunch of these forecasts from analysts – SuperData was one of them – were just ridiculous. I showed the gap and tried to forewarn people. They later brought their numbers down and called it the “trough of disillusionment” or something like that.

Gartner’s just-released forecast, however, already has VR out of that trough, on track for the mass market as early as two years.

As for VCs who've invested in VR, analyst forecasts of immediate major growth like these aren’t taken seriously by many:

If Facebook's $200 Standalone Oculus Rift Doesn't Sell Well Let's Finally Declare Mass Market VR Dead in the Water OK?

Analysts have expected to be coming and I suspect social VR developers like High Fidelity and Sansar were given the inside word from Facebook, and now according to Bloomberg it seems to be on its way:

Facebook’s new headset is designed to bridge the gap -- a device that will sell for as little as $200 and need not be tethered to a PC or phone, according to people familiar with its development. It will ship next year and represent an entirely new category. Like current Oculus products, the new headset will be geared toward immersive gaming, watching video and social networking, said the people who asked not to be named to discuss a private matter. Code-named “Pacific,” the device resembles a more compact version of the Rift and will be lighter than Samsung’s Gear VR headset, one of the people said.

The Gear is actually quite light so I'd be impressed if Facebook managed to pull that off. This seriously seems like a last bid for the mass market: Either Pacific sells millions of units its first year, or it'll be difficult to justify any forecast of VR gaining mass market adoption.

Pictured: Bedding Taylor Swift in the Oculus Rift, because you know there's definitely a market for doing that.

Virtual Reality Pioneer Now Trying to Develop Virtual Wall for Trump

A decade or two ago, William Gibson or Neal Stephenson would have dreamed up an unlikely character from the near future who's an extremely young and fabulously wealthy metaverse pioneer living in a California mansion with fellow anime fans dreaming up new drone technology to serve America's increasingly authoritarian state. But instead, the New York Times is now reporting it as actual real life:

As as he sees it, according to those familiar with the plan, the technology can be used for many kinds of perimeter security, including military bases and stadium events, where it could be used to detect drones. Software would help the system figure out which objects to ignore, like birds and coyotes. Those familiar with the plan say Mr. Luckey believes his system, which can be mounted on telephone poles, can be built far more cost effectively than Mr. Trump’s proposed wall on the Mexican border — and with fewer obstacles from landowners.

And as you might have guessed, the former virtual world executive who's now Trump's top advisor is involved:

As Palmer Luckey Leaves Oculus, Here's NWN's History With the VR Pioneer

Palmer Luckey's successful Oculus Rift Kickstarter in 2012 basically launched this new wave of VR hype we're currently in, but now he's leaving/being forced out of Oculus the company that Facebook now owns:

According to Oculus, this will be Palmer’s last week with Friday marking his official last day as an employee of Facebook. In an official statement, the company said that: “Palmer will be dearly missed. Palmer’s legacy extends far beyond Oculus. His inventive spirit helped kickstart the modern VR revolution and helped build an industry. We’re thankful for everything he did for Oculus and VR, and we wish him all the best.” When asked if Luckey’s departure was voluntary, Facebook representatives declined to comment, citing a policy of not discussing internal personnel matters.”

This is almost certainly due to Luckey becoming PR poison due to his troll-ish Trump support last year. I've met and spoke with Palmer several times since 2014, and always found him a enthusiastic, friendly dude, albeit with a sometimes dismissive arrogance typical to very young men who get a glimmer of Silicon Valley success so early on. For instance, he got into a bit of a hair-splitting debate with Philip Rosedale on my Facebook page. And when I profiled him for Wired last year, this is how he painted the social benefits of VR:

“It's easy for us to say, living in the great state of California, that VR is not as good as the real world,” Luckey went on, “but a lot of people in the world don't have as good an experience in real life as we do here.” In fact, as Luckey suggests to me in a follow-up conversation, it may be people from developing nations who’ll be among the first to embrace virtual reality. While the technology must become extremely compelling to attract well-off Californians away from their enviable real lives, he argues, “[i]f you’re talking about Chinese workers or people who are living in Africa, I think the threshold is a lot lower… it could be a lot of the early adopters are the people who have a greater incentive to escape the real world.”

After Oculus, I wonder if he'll take that vision to another VR company. Anyway, here's some more Luckey highlights from New World Notes:

The Question Every Virtual Reality Evangelist Must Answer Today

"Do you still think high-end VR will go mass market when Oculus can't even interest the average consumer in a free demo?"

I mean seriously:

Facebook is closing around 200 of its 500 Oculus virtual reality demo stations at Best Buy locations across the US, Business Insider has learned. The scaling back of Facebook's first big retail push for VR comes after workers from multiple Best Buy pop-ups told BI that it was common for them to go days without giving a single demonstration. An internal memo seen by BI and sent to affected employees said the closings were because of "store performance."

For the company's sake, for instance, I hope Linden Lab's board is asking that of CEO Ebbe Altberg today. Every answer VR evangelists usually give in the face of skepticism falls short:

Oculus Loses $500M in ZeniMax Lawsuit -- Likely Due to Palmer Luckey Mentor Not Testifying?

Pretty brutal ruling:

In awarding ZeniMax $500 million, the jury also said that Oculus did not misappropriate trade secrets as contended by ZeniMax. Of the $500 million, Oculus is paying out $200 million for breaking the NDA and $50 million for copyright infringement. Oculus and Luckey each have to pay $50 million for false designation. And Iribe has to pay $150 million for the same, final count.

Ironically, Luckey's secret Reddit name when he was secretly financing a pro-Trump group was "NimbleRichMan" -- and this ruling seems likely to make him much less rich. And Oculus lost at least partly because the defense wasn't very nimble: Reportedly, VR pioneer Nonny de la Peña was not brought to testify on Oculus' behalf, even though her testimony would have refuted a key ZeniMax claim, that John Carmack (who once worked for ZeniMax), not Luckey, was the key developer of the first Rift prototype. Nonny knows otherwise:

Oculus/Zenimax Lawsuit Coverage Understates Key Role of Latina VR Pioneer in Creation of Oculus Rift

"Hunger in LA", De la Peña project which publicly showcased a Oculus Rift prototype for the first time

You've probably read about the lawsuit that game publisher Zenimax filed against Oculus VR/Facebook, alleging intellectual property theft of proprietary VR technology, which is currently being decided in court. Very roughly summarized, Zenimax is claiming the Rift is based on tech the company owned while Oculus CTO John Carmack was there, while Oculus is claiming that company founder Palmer Luckey created a working Rift prototype before he even met Carmack. In the coverage, some subtle but important distinctions are being missed, or underreported. For instance, Upload VR cites Luckey as saying this in court:

Luckey gave a detailed run down of the first prototypes of the Rift, which he started making after purchasing other headsets. He detailed four prototypes he made, the last of which he showed at a USC Lab in January 2012, where he worked as a technician. Also referenced was his work with Nonny de la Peña, a journalist making her own VR tech to tell stories. Luckey joined her for the 2012 Sundance Film Festival, where her piece, Hunger in Los Angeles appeared on a rudimentary headset allowing for six degrees of freedom movement. It was not the Rift, though Luckey said the piece could have run on his headset “to a certain degree.”

This isn't quite right. As I reported last year:

Palmer Luckey was de la Peña’s intern at USC’s Institute for Creative Technologies, learning and honing much of his VR abilities under her guidance. Working with de la Peña in 2012, Palmer Luckey originally built what would become a prototype for the Oculus Rift (nearly a year before his famous Kickstarter) for her acclaimed “Hunger LA” VR experience at the Sundance Film Festival.

Polygon's coverage misses this connection entirely, citing de la Peña as someone who merely "worked with [Luckey] while at USC’s MxR Lab". No: In fact, Luckey worked for her, and she made it possible for Luckey to publicly present for the first time an Oculus Rift prototype at Sundance, one of the most important film and interactive conferences in the world:

What Dealing With Second Life Griefing Can Teach Developers of New VR Social Worlds

Facebook VR engineer Jim Purbrick hosted this recent conversation on making virtual reality social spaces safer for everyone, especially women and minorities who tend to be targeted for harassment most. Jim (he of the epic beard) is working on Facebook's avatars and VR rooms, and as I've mentioned before, much of his wisdom comes from being an engineer during Second Life's early growth phase. Joined by developers of new VR platforms Bigscreen and Altspace VR, who share their own experiences dealing with griefers and trolls, it's striking how we keep repeating a three decade-plus history of virtual world harassment. For Jim's part, there's still a lot that Second Life can teach developers of new VR-based social worlds:

"You need to consider how everything can be used to harass people (from grey goo to orbiters -- SL scripting automated a lot of harassment)," he tells me. "Just providing the functionality isn't enough: the machinery to lock down the land used for the Anshe Chung interview existed, but it wasn't easy enough to use when the flying penises arrived." (Yes, flying penii -- see NSFW video below.)