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Oculus Shuts Down Its Film Studio as VR Still Struggles to Catch On

As consumers remain unconvinced about virtual reality, manufacturers may rein in spending and decide which aspects of the technology to focus on.

Facebook's virtual reality unit, Oculus, has announced that it’s shutting down its in-house film studio—news that may be the start of a bit of belt-tightening in the industry, as more firms try to make VR profitable.

Story Studio, as it was called, was part of an attempt on the part of Oculus, which makes the impressive Rift headset, to foster a rich and varied buffet of content for VR users that isn't restricted to gameplay. And in its announcement, the company—which was acquired by Facebook in 2014 for over $2 billion—said that it will commit $50 million to funding other filmmakers and developers that are building non-gaming content for VR.

But the move could be read as a further sign of VR's struggles to break into the mainstream. As we reported at the end of last year, 2016 was supposed to be a banner year for VR, but sales ultimately proved sluggish. And Oculus appears to be faring worse than most: having suffered the indignity of having to close down a string of in-store demo stations due to lack of demand, it later slashed $200 off the price of its Rift headset and motion controllers to keep up with the likes of Sony.

Then there’s the little matter of that painful lawsuit, in which video game publisher ZeniMax took Oculus to task over alleged intellectual property theft. Ultimately a Texas jury found Palmer Luckey, cofounder of Oculus, guilty of failing to comply with a non-disclosure agreement that he signed with ZeniMax, though he wasn’t found to have stolen trade secrets. That little oopsie cost Oculus $250 million.

With the wider industry struggling to convince people to buy the devices, VR companies will have to take a hard look at their offerings. That's likely to result in trimming some fat and distilling their technology down into something that consumers actually want to buy. It’s just a shame that nobody quite knows what that is yet.

(Read more: Reuters, “Oculus Rift Is Too Cool to Ignore,” “Winners and Losers Begin to Emerge in VR Hardware Race,” “VR Is Cool and All, But Will People Buy It?”)

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