Defying Reality

by David M. Ewalt

  In other words, Mark Zuckerberg bought Oculus to build the Metaverse, the collective virtual reality Neal Stephenson imagined in his 1992 novel Snow Crash—a place where user-controlled avatars could hang out, do business, and socialize.

  It might sound crazy that one of the richest people in the world would spend billions to chase down a sci-fi fantasy. But a few months after the acquisition, I asked Palmer Luckey outright if that was what was happening. “I feel like it’s a no-brainer,” he said. “The dominating vision of virtual reality in sci-fi is using it for training people, using it for simulations, or using it to access an entire virtual universe existing alongside the real world. That’s been a core part of virtual reality science fiction for decades. It’s been very clear that it is going to happen, and that at some point there is going to be a virtual metaverse that exists alongside the real world.”

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  Facebook’s acquisition of Oculus VR was big news. Zuckerberg had bought out other companies before, and had spent much larger sums of money, but his endorsement of a largely abandoned technology made people take notice. If the genius who helped usher in the age of social media believed in the future of VR, maybe it really would be the next big thing.

  Businesses started scrambling to figure out how VR might disrupt their industries. David Cole, a veteran of the digital imaging business who had developed VR and 3-D tech for the Eastman Kodak Company, cofounded a start-up called NextVR in 2009 to develop systems for broadcasting live events in virtual reality. Before the Facebook deal, potential content partners had been intrigued but skeptical, telling him “let’s wait and see, we want to know what VR is all about, but we’re not committing,” he said. After Facebook, “the entire world just opened up and changed.”

  Facebook’s commitment legitimized VR and convinced other businesses to start investing in the technology, according to Michael Pachter, a digital media industry expert and analyst for financial services firm Wedbush Securities. “I have been a skeptic of Oculus,” he said a few months after the acquisition was announced. “If you don’t have a big install base, it’s hard [to attract] third-party publishers . . . and if you don’t have third-party publishers, you’re likely to have very little content. And then Facebook came along. Facebook is looking at the hardware as a platform to do other things—maybe instruction, something like teaching—and Facebook will get third parties to make content. Now Oculus can realize a broader strategy, with a big bank account behind them.”

  Other analysts remained more skeptical. Some of them told me that VR was unlikely to take off outside of video games and niche entertainment markets like amusement parks. And a few cautioned that the Facebook deal would probably just kick off another fruitless hype cycle, a repeat of the booms and busts of the eighties and nineties.

  But many of the loudest critics of the deal turned out to be some of Oculus’s earliest supporters—the VR enthusiasts, hackers, and gamers who’d cheered for Palmer Luckey when he was just a kid in a garage with visions of reviving VR through an open-source, community-oriented project. “I feel like I’ve been waiting in line for an awesome roller coaster, and right when the end of the line is in view, they divert the line to a fucking carousel or something,” a former fan wrote in a post reacting to the news on the website Reddit.

  Some of the critics assumed that the amazing VR rig they’d hoped for would be dumbed down into a mass-market gimmick designed for chatting with friends and sharing family photos. “I don’t want a social platform,” another Reddit user lamented. “I want something I can attach to my face to help me forget there are other people.” Others worried that Facebook would ruin the Rift with embedded ads and intrusive data collection. And some video game developers expressed concern that Facebook might be an untrustworthy business partner.

  A few hours after the acquisition was announced, Markus “Notch” Persson, creator of the blockbuster construction game Minecraft, published a blog post explaining that he had backed the Rift Kickstarter, gotten excited about the technology, and planned to make a version of his game for the Rift. But Facebook’s ownership of the technology changed everything. He wrote:

  Facebook is not a company of grass-roots tech enthusiasts. Facebook is not a game tech company. Facebook has a history of caring about building user numbers, and nothing but building user numbers. People have made games for Facebook platforms before, and while it worked great for a while, they were stuck in a very unfortunate position when Facebook eventually changed the platform to better fit the social experience they were trying to build . . .

  I definitely want to be a part of VR, but I will not work with Facebook. Their motives are too unclear and shifting, and they haven’t historically been a stable platform. There’s nothing about their history that makes me trust them, and that makes them seem creepy to me . . . And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition.

  Persson immediately called off his version of Minecraft for the Rift, and some smaller game studios promised to suspend their own projects or to cancel pending orders for the development kit. For many early backers of Oculus, the Facebook deal was nothing less than a betrayal, a sellout move, and corporate appropriation of their hobby. They were sure that Zuckerberg and his minions would ruin the product and poison the market. Just like they did in the eighties and nineties, clueless businessmen were going to burst the VR bubble.

  Palmer Luckey had expected some of his supporters to object to the Facebook deal. “We knew there would be people who were upset,” he told me after the deal went public, “but you can’t make decisions based on a vocal minority of people who are going to get pissy. You have to make the decision based on what you think the best thing overall is.”

  Still, he seemed a little defensive, and perhaps a little hurt by how quickly the denizens of tech-centric Internet forums—a subculture he considered his own—had turned on the Rift. “First of all, the Kickstarter was for the development kit,” Luckey said. “There have been other companies that have sold before even shipping their Kickstarter products, and I think that’s a real bait and switch. That’s not what we did. We never said we’re never going to raise money or partner with another company.”

  The critics, according to Luckey, weren’t even real backers of the Rift. “Everyone who’s actually buying dev kits, producing games and investing significant portions of their life into VR, almost all of them are very excited because this means there’s actually gonna be a platform, it’s actually gonna happen,” he said. “All the people saying, ‘Oh, this is terrible, it’s the worst thing,’ those people don’t really have any investment in virtual reality.”

  Other critics of Oculus had made significant investments in the technology, and once they saw how much money Facebook spent in the acquisition, they wanted to share in the wealth. In May 2014, John Carmack’s former employer, ZeniMax Media, filed a lawsuit against Oculus VR and Palmer Luckey, claiming that Carmack had illegally misappropriated ZeniMax trade secrets when he jumped ship and joined the start-up.

  In a complaint filed to the US District Court for the Northern District of Texas, ZeniMax alleged that while Carmack had served as technical director for the company’s Dallas subsidiary id Software, he’d spent the company’s time and money conducting research into VR, and then inappropriately shared that information with Luckey. ZeniMax also claimed that Luckey had signed and violated a nondisclosure agreement, and Oculus later refused to reasonably compensate the company for its “expertise and know-how.”

  Without ZeniMax, the company alleged, the Rift would have never been a viable product and Facebook would never have acquired Oculus. “Defendants have wrongfully taken ZeniMax intellectual property and commercially exploited it for their own gain,” the complaint said, “and now stand to realize billions of dollars in value.”

  Carmack denied the charges, arguing that while ZeniMax owned com
puter code that he had written for the company, it didn’t own the insight he’d shared with Luckey. And Oculus’s response characterized the lawsuit as little more than a scheme to extort a piece of the $2 billion Facebook deal. “It’s unfortunate, but when there’s this type of transaction, people come out of the woodwork with ridiculous and absurd claims,” a representative said in a statement. “We intend to vigorously defend Oculus and its investors to the fullest extent.”

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  Ultimately, neither the lawsuit nor disgruntled supporters would stop the Rift’s progress. Throughout 2014, top engineering and business talent flocked to join Oculus, including Atman Binstock and Michael Abrash, two pioneering VR engineers who came over from video game giant Valve Corporation; and Jason Rubin, cofounder of the game studio Naughty Dog. “Often they didn’t have the intention of working with us until they tried the Rift,” said Luckey. “Then they said, ‘Oh, wow, this is the future. I have to be a part of this.’”

  Oculus also expanded through acquisitions. In June, the company acquired Carbon Design Group, a Seattle product design studio that had worked with Microsoft on projects including the Xbox 360 video game console’s controller and Kinect peripheral. In early July, the company bought RakNet, a California firm that made software to power online features in multiplayer games.

  Meanwhile, Luckey and his engineers continued to produce new versions of the Rift, and on July 25, Oculus VR started shipping a new prototype headset, the Development Kit 2. Like its predecessor, the $350 DK2 was meant for the use of software developers and researchers, not the general public—Oculus was still a long way from a consumer-ready product. But the updated hardware did represent a major leap forward from the company’s first, Kickstarter-funded device.

  The biggest change was that the DK2 was a lot less likely to make its users sick. For generations, engineers working on virtual reality had struggled to solve the problem of simulator sickness, the nausea caused by discrepancies between what your body sees and what your body feels. The Kickstarter version of the Rift addressed the issue with built-in gyroscopes (to track when you tilted your head), accelerometers (to track how fast you moved it), and magnetometers (to track which way your head was pointing, as a compass would). All together, these sensors allowed the DK1 to track your gaze in any direction—the device knew when you looked up or down or left or right, and could adjust the image it displayed, near instantly, to match.

  But the DK1’s onboard sensors tracked only rotational movement; it knew where you were looking but not where you were. If you kept your head steady, looking at a single point in space, and then took a step forward, the system didn’t know that you’d moved and didn’t update the display. When that happened, your body would feel like you were getting closer to whatever you were looking at, but your eyes would report that the distance to that object hadn’t changed. The resulting simulator sickness could end your VR experience in unpleasant ways.

  The DK2 addressed this problem by introducing a system to track translational motion, or movement from one place to another. The kit included a small digital camera, and the surface of the new headset was studded with forty infrared light–emitting diodes. Even though the human eye can’t see infrared, a camera can, and when the Rift was in use the LEDs functioned like little beacons, telling the computer exactly where the user was and when they moved. Combined with data from the rotational sensors, this new positional tracking system meant DK2 users could look around and move around in the physical world, and their view of the virtual world would always match up. That meant fewer discrepancies between seeing and feeling—and fewer game-over moments of simulation sickness.

  The DK2 also reduced the potential for nausea by using a better screen. Whereas the DK1 had used a comparatively low-resolution liquid crystal display, the DK2 featured a high-definition 1920-by-1080-pixel organic LED panel. The upgrade meant that the new screen had a much higher refresh rate—it could update the picture more times each second, so it was less likely to look blurry when a user moved their head. The new display also offered brighter colors, sharper contrast, and better detail. The difference was something like upgrading from a 1990s-era cathode ray tube television to a twenty-first-century flat-screen TV. With the new display, virtual worlds looked more real.

  Once Oculus’s developers got the new headset in their hands, they started taking it apart to see how it worked and discovered how the company had managed the upgrade. The screen was a repurposed component from one of the most popular smartphones on the market, the Samsung Galaxy Note 3, with Samsung logo, earpiece speaker, and other components still intact. Since the DK2 was just an interim prototype, one step on the long march to a consumer product, Oculus had planned to ship around only 50,000 units, so it didn’t make sense to spend the time and money to build a custom display. Meanwhile, Samsung had years of experience making LED screens, and at the time, it was manufacturing millions of Note 3 phones every month, so Oculus was able to fulfill a small order for high-quality components at an unusually low price.

  The deal was the first product of an ongoing partnership between Oculus VR and the Samsung Group. Brendan Iribe had first connected with the South Korean consumer electronics giant a year earlier, at a meeting set up by one of Oculus’s investors, where he’d expected to pitch Samsung on an arrangement to buy their displays. Instead, he was surprised to find that he was the one being pitched.

  “I started talking about what we were looking for, and they said, ‘Actually, we’ve been doing R&D into VR as well . . . we really believe there’s an opportunity in mobile and we’d like to partner with you.”

  The Samsung executive showed Iribe a prototype they’d been working on: a 3-D-printed plastic frame with two small lenses, designed to attach to one of the company’s mobile phones. Basically, the device was a twenty-first-century update of the Holmes stereoscope, where the pictures were displayed on a phone instead of on paper cards.

  “I was pretty skeptical at first,” Iribe said. “My feedback was, ‘This isn’t very good. How long have you been working on this?’ They said, ‘About four months, ever since we saw the Rift at CES.’” Samsung’s execs had recognized that low-cost VR headsets could be a new source of revenue for the company, as well as help drive sales of their mobile phones, but the company’s engineers were already stumped by technical problems, like how to achieve precision head tracking. So Iribe suggested that the motion sensor on the phone wasn’t good enough, and that the device would work better if it included rotational sensors from the Rift DK1.

  Each company put a team on the problem, and a year and a half later, on September 3, 2014, they announced the results of their collaboration: the Samsung Gear VR Innovator Edition, a $199 portable VR headset that used a Galaxy Note 3 smartphone as its brains and screen.

  “We expect that there are going to be different categories of VR,” Iribe explained. “The highest fidelity experience will run off a computer, but mobile VR offers an ease of use that’s going to be incredibly popular.” Smartphones were already a ubiquitous technology, and desktop PCs with enough processing power to run high-resolution 3-D simulations were decidedly less common, so Oculus was hedging its bets. The new gadget couldn’t compete with the Rift in terms of comfort or image quality, but it was cheaper and easier to use.

  Like the first two Rift development kits, the Innovator Edition was marketed as “an early-access, beta-version of the device for developers and enthusiasts rather than a final consumer product.” At the time, there were an estimated 19 million software developers around the world, and around half of them were making apps for mobile devices. Oculus and Samsung hoped the mobile headset would inspire that huge workforce to start working on VR, and create the games and programs consumers would demand when the Rift and Gear were finally released to the mass market.

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  Appropriately, the first people to actually receive
a Gear were nearly a thousand die-hard VR enthusiasts who traveled from around the world to Oculus Connect, the company’s first developer conference, about three weeks after the Gear was released. The event was held at a hotel in Hollywood, California, just steps from tourist attractions like the Walk of Fame and Grauman’s Chinese Theatre, but while I was there, I got the sense that most attendees never left the hotel. They were too excited to talk about and learn about VR, packing into seminars like “Introduction to Audio in VR” and “The Human Visual System and the Rift,” forming impromptu follow-up discussions in every hallway, and congregating around laptops hooked up to development kit headsets in order to share and get feedback on their personal VR projects.

  Oculus, of course, was showing off their own technology, including the latest Rift prototype, code-named Crescent Bay. The company’s in-house content team had created a ten-minute collection of “Crescent Bay Experiences”—the same demos that I described in the introduction to this book—that seemed to have a profound effect on everyone who put on the headset. When I finally recovered from my own turn with the prototype, I came back to the demo room and watched for a while as other attendees tried it out. They’d disappear into the cubicles and emerge sporting either a dazed expression, like their mind had been blown, or an irrepressible ear-to-ear grin. When some of my colleagues in the technology press called it “breathtaking” and “a new high-water mark in virtual reality,” I started to wonder if we had unwittingly become part of history, like the reporters who attended the first public demonstration of television in 1928—witnesses to the birth of a new medium.