Facebook’s recent earnings report highlights its focus on virtual and augmented reality, viewing them as the key to unlocking massive value for people’s lives and the economy. The company has been steadily acquiring small virtual reality workshops, which has given it a robust foundation in modern technology and design skills, enabling it to assert its dominance in the VR and AR world.
Facebook’s business strategy includes acquiring existing virtual reality software and hardware businesses, upgrading its VR equipment, and securing revenue from pre-established VR games while retaining leading software developers to create unique content within the Oculus system. The Oculus Quest 2, a standalone headset with wire-free experience and no need for an external device, gives Facebook a competitive edge in hardware, with a lower price point compared to other major headsets in the market.
Facebook plans to test ads in selected games on the Oculus platform, which could generate more revenue for developers and attract more developers to the Oculus platform, leading to a more realistic gaming experience. With its massive social networking user base of 2.8 billion monthly active users, Facebook has an edge in attracting consumers to VR gaming, making it more accessible and offering a high potential for network effects.
Facebook’s future dominance in the VR world could come from its unique position in attracting top-tier content developers and consumers. With exclusive content offerings, Facebook could attract and retain players, as long as it rolls out ad content in a way that feels organic to Oculus players. Social VR games are more valuable with more players, and Facebook could rapidly gain market share in VR gaming.
