Can Oculus Rift Turn Virtual Wonder into Commercial Reality?

Luckey’s belief in his product is infectious—so infectious, in fact, that in the 36 hours after a demonstration of the Oculus Rift prototype at the E3 video game conference in June 2012, his company raised more than $1 million in Kickstarter funding, four times as much as was asked for. When the campaign closed, the total was nearly $2.5 million. He’s gone on to convince the suspicious tech mavens of Silicon Valley too, raising $16 million in Series A funding in recent months. The world, it appears, may at last be ready for VR.

Perhaps it’s a question of managing expectations. Arguably where the original VR dream faltered was in failing to live up to the anticipation of its users. We expected to be transported through the helmet into a new dimension, full of restless color and life, but the virtual reality we experienced fell some way short. Even in its current non-HD version, Oculus Rift seems to deliver. Veteran video game developer Cliff Bleszinski was so impressed with the hardware that he became an investor shortly after playing. Meanwhile, a YouTube video of an astonished 90-year-old grandmother using the kit has garnered more than two million views.

Luckey, who was yet to be born when W Industries launched the first mass-market HMDs designed for video games in 1991, designed the Oculus Rift prototype “as a one-man team in my garage.” At the time, he had some experience working on VR projects at ICT’s mixed reality lab but was pursuing a degree in journalism. The results of his early tests were so positive that he quit the course to concentrate full time on the project.

Luckey was obsessed with VR as a child. “I grew up with influences such as Snow Crash, Lawnmower Man, and The Matrix,” he says. “Growing up with those influences, I had always dreamed of being able to play video games using VR technology.” Initially, Luckey assumed that there was a VR headset somewhere in the world that could do what he wanted. “Searching for the headset became an obsession,” he says. “As I purchased more and more HMDs, it became clear that VR was in a sorry state as far as consumer products were concerned. Even in the professional market, where headsets cost many tens of thousands of dollars, they weren’t even close to the performance I wanted. So I started tinkering in my garage, hoping that I could make something better. Initially, it was purely for myself.”

Luckey’s goal with those early designs was to create an HMD with as little lag between head movement and video image as possible, and a wide field of view. “I wanted something that made it feel like you were inside of the game, not just looking at a screen strapped to your head,” he says.

At E3 2012 he loaned his sixth prototype, now dubbed the Rift, to John Carmack, the American video game programmer whose innovations in 3-D graphics set the landscape of contemporary video games. Carmack showed the technology to the press running an updated demo of his game Doom 3, which he had modified to work with the new hardware. The response was, to use Luckey’s word, “massive.” What he had presumed would be of niche interest to virtual reality enthusiasts turned out to have broad appeal. “The virtual reality community was tiny at the time,” he says. “It was a happy surprise to see that so many ‘normal’ gamers were interested in it too.”

Within a month of E3, Luckey’s prototype had become a business. Video game industry veterans Brendan Iribe, Michael Antonov, and Nate Mitchell joined Oculus VR as CEO, lead software architect, and vice president of product respectively, and an initial development kit production run was planned in China.

What could make the product so compelling is the combination of price and performance. At $300 for a developer kit, studios used to spending thousands of dollars on video game development hardware are likely to see it as a relatively small gamble for a piece of technology that could have a big impact on the tech landscape. (Indeed, when development kits were put up for sale on the Oculus website in September of last year, they sold at a rate of four to five per minute.)

But Luckey concedes that the product’s gestation has not been without problems. “Taking something from the lab and turning it into a real product is difficult, especially for a VR headset,” he says. “With some technologies, a single advance is enough to build a product on. VR requires many complex technologies to work together flawlessly, and if you don’t get it right, everything falls apart and the immersion is lost.” It’s this particular challenge more than any other that has held the Oculus team back from announcing a firm release date.

There are also the potential side effects for users. Minecraft creator Markus Persson (see “Innovators Under 35: Markus Persson”) wrote earlier this year: “Oculus Rift integration is extremely easy. The only problem is nausea.”

Indeed, disorientation and dizziness are common complaints among new users. “The device itself is not always the root cause,” says Luckey. “Even if the hardware perfectly replicates how humans view reality, there will always be situations that make users feel poorly.” Problems particularly arise in experiences where there is a mismatch between what players see on screen and what they feel in the inner ear, where the sense of balance is controlled. “VR does not change the fact that a roller coaster or fighter jet ride are liable to make some people feel ill,” he says. “But one positive thing our user testing shows is that even people who suffer side effects tend to acclimate themselves over time; people who use the Rift on a regular basis are much less likely to have problems.”

Newbies’ problems aside, the results, if everything continues on its current trajectory, could prove transformative. “What’s surprised me is that it’s not just people interested in technology and video games that are excited,” he says. “The Rift is being used for all manner of non-gaming applications like telepresence, architecture, CAD, emergency response training, phobia therapy, and many more.”

With no fixed release date, though, Luckey and his team must balance costs against sticking to a schedule and using available technology. A 1080p version of the device was demoed in public just over a year after the original prototype’s public debut, but Luckey is aware that he cannot keep adding to the device’s scope ahead of release. “We want to ship the best technology possible, but that has to be balanced with schedule,” he says. “We can’t delay forever, no matter how good the parts are just a few months down the road. On top of that, you need to keep the price reasonable. If a device costs too much, it may as well not exist.”

Where once Luckey was concerned only with creating a product that would meet his own needs, today his ambition is far more wide-ranging. “Virtual reality is going to revolutionize life,” he says. “As the content library grows and the price diminishes, it is going to be a very attractive technology for consumers in all walks. Virtual reality provides more freedom for content creators than any other form, and allows us to simulate other art forms like movies, books, or traditional games. In that sense, it is the ultimate medium.”