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LOS ANGELES — Virtual reality gaming startup Oculus VR returned to the Electronic Entertainment Expo (E3) video game trade show this week in Los Angeles as a real, competitive platform in the emerging VR game business.

It’s been just two years from the first public showing of the Oculus Rift virtual reality goggles, and now Facebook is in the process of buying the Irvine, Calif.-based company for $2 billion. And at E3 this week, Oculus showed off some new demos.

Oculus founder Palmer Luckey learned the ins and outs of virtual reality at the Mixed Reality Lab at the University of Southern California. He became obsessed with creating a head-mounted display that could immerse people in a virtual world, and his work caught the attention of gaming guru John Carmack, the id software cofounder who also led development on Doom and Quake. Carmack asked for a prototype and showed it to the press at the E3 show in June 2012.

That drew the eye of Brendan Iribe and Nate Mitchell, who joined Luckey and convinced him to turn a humble do-it-yourself project into a Kickstarter-funded developer platform that could eventually be mass-produced as consumer virtual reality goggles.

They raised $2.4 million from more than 9,500 backers on Kickstarter. Then they raised $16 million in venture funding. Carmack came on full-time as chief technology officer. Then Marc Andreessen, the Netscape founder and cofounder of Andreessen Horowitz, joined in a $75 million funding round.

Now Oculus, with its own booth and meeting rooms at E3 2014, showed some cool-looking demos of games such as Alien: Isolation and Playful’s Lucky’s Tale. Here’s an edited transcript of our interview.

GamesBeat: This looks like your first exclusive content.

Brendan Iribe: It is. It’s created a huge buzz at the show, Lucky’s Tale. We’ve been working with Paul Bettner and the Playful team since the beginning of Oculus. Paul was one of, I think, seven $5,000 Kickstarter backers. His first visit at the office, he came with his whole team. I didn’t even know that he was coming for his Kickstarter visit. I was there spending all this time with him and we had a lot of fun talking about VR, where it was all going. At the end I was like, “Hey, I have to get back to work. Hope you had a good time.” And he says, “This was totally worth that $5,000.” And I’m like, “That’s why you’re here?” He says, “Yeah! You spent all that time with us and you didn’t even know you had to?”

They hung with us the whole way through prototyping. We gave them early duct tape prototypes they started working with. In the beginning they worked up something like 30 different experiences to figure out what was working in VR and what wasn’t.

GamesBeat: When Paul Bettner started the company, did he start it to do this?

Iribe: It was originally named Verse. He founded the studio around VR. That was the goal. When he found out that we were still pretty far out from the consumer market at that time – that was two years ago – he focused on making a few Ouya or mobile experiences. Part of the team worked on existing platforms and then part of the team continued to R&D on VR. Now it feels like more of their team is focusing on VR. But you’d have to ask him.

Certainly the reception for Lucky’s Tale has inspired him to be pretty focused and excited about where this is all going to go, and where Lucky’s Tale as an exclusive for Oculus is going to go. The reception has been awesome.

GamesBeat: Is Jason Rubin’s job to stir up more of this or to work internally?

Iribe: We actually hired two Jasons. Jason Holtman right here recently joined to run platform. He’s going to be largely leading the overall platform strategy around building out the ecosystem and the developer relations with Aaron and publishing with DeMartini. It’s official. We’re building a platform. There’s a lot of engineering around that, with Marshall. Jason’s background comes from Valve, running Steam and evangelizing Steam to third-party developers over eight years or so. It’s great to get the person who built Steam to help build our platform.

Jason Rubin we announced this week as the head of worldwide studios. He’s going to lead our first-party content development. We’re going to make a few games and spin up a few studios of top talent — engineering, game design, artists – to put together made-for-VR content and experiences.

Playful's Lucky's Tale

Above: Playful’s Lucky’s Tale

Image Credit: Playful

GamesBeat: You need that because you have this very large competitor in Sony, right?

Iribe: We don’t look at them as a competitor. We look at Sony as someone who’s jumping into the space to help evangelize and build out VR. They’re very centered around a console experience. They’re putting Morpheus out as an accessory to their console platform right now. We’re squarely focused on VR. We don’t have to make 2D games or experiences anywhere. We have 140, 150 people totally focused on VR now. Many of the best developers in the world are all joining with a single mission – building the best VR platform and product and experiences.

GamesBeat: What made you want to come over to Oculus?

Jason Holtman: I put a headset on. It’s pretty much that easy. I’d known these guys for a while, worked with the same developers and publishers. It’s all about content and entertainment. The moment you put one of these headsets on, it’s apparent what’s fun and it’s apparent what the challenges will be like. It’s apparent what developers and publishers will want to do. It sounds a little cliché, but putting the headset on, that’s how you understand what someone would want to do with this, either a customer or someone in the industry.

Iribe: That’s been the recruiting method. Put this on. Take it off. Do you want to be a part of building the future now? Both developers out in the ecosystem and people in the community are getting behind this. Internally we’re able to ramp up this top talent team.

Whether it’s developers or industry veterans on the business side, top talent likes to work together. Once you start forming this group of super talented people, it’s awesome to work together. We’re able to make so much progress so fast. Everyone’s brilliant. There’s a lot of respect amongst the team. It’s a lot of fun.

GamesBeat: What are the challenges in bringing virtual reality mainstream? What are the obstacles that you’re moving forward to tackle over these next couple of years?

Iribe: The elephant in the room has always been simulator sickness and disorientation. That’s one of the biggest challenges. I think we’ll get over that with consumer V1. That’ll be behind us and then there’ll be a new set of challenges. Valve built the Valve Room that you may have heard about. That’s the first experience I’ve ever tried that really cracked the code on delivering a comfortable experience. We still have a lot of work to get it there, but we will.

Now there’s a whole new set of challenges we’re looking at. That’s form factor — how to continue to shrink it down, make it smaller, lighter weight, lower cost. We need to help the ecosystem and the community build great content. If there’s no great content, there’s nothing to do. It’s more of an enthusiast nerd toy than it is a consumer product and platform. Jason’s going to be largely leading that with us and helping to get out there and support game developers making great content.

GamesBeat: It sounds like you also have to decide on how to control it.

Iribe: Input’s a big unknown. On the technology side, we haven’t announced what we are shipping in terms of input or what we’re looking at as the go-to-market for a V1 input device. Input is going to be a long-term challenge. The most natural form of input for VR is just your hands. People put on the headset and look around and the first thing they say is, “This is incredible! But where are my hands?” We want to solve that, certainly. The second thing everyone does is look down and look for their hands, for their body.

We don’t know how long it’ll take to solve that. We do try to set expectation along the way. The first challenge was making a consumer headset that everyone feels comfortable in, where you get that sense of presence. Then we go from the sense of visual presence to getting avatar presence in there, trying to master input. What is eye input, mouth input, hand input?

GamesBeat: Do you feel like you’re at the beginning of the input process?

Iribe: We’re at the beginning of the whole thing.

GamesBeat: Well, you’re pretty far along on visuals. But I’ve never seen a demo of anything except somebody else’s input device.

Iribe: Yeah, it’s just the beginning. We have been R&Ding input for a while. We’ve been trying a bunch of stuff, just like Paul Bettner’s team on the content side tried 30 different prototypes before they figured out what kind of game they wanted to make. We tried tons of input devices before we started to try and figure out which direction we might go. We’re not ready to talk about it yet, because we’re still figuring it out. I’d say we’re still working through a few of the final prototypes. But it’s definitely high on the list of things that need to be solved.

GamesBeat: I tried to control that little moon simulator today — with the hands. It’s amazing how much they’ve got the motion capture down.

Iribe: It’s inevitable. We view it as a tractable problem. Today, things like Leap and a number of different technologies are doing motion tracking. It isn’t quite good enough for VR yet, but it’s all approaching the state of being good enough. In the near term, you’ll be able to put on the headset and see your hands and feel like your body is really there. It’s not necessarily in V1, but in the near term, it will come. We’ll get the avatar in – eyes and mouth and all these different features.

We don’t like to try to solve a problem until we really get it nailed. Then we talk about it and put it out to the developers and to consumers. We won’t talk about hand and finger tracking until we think we have a great solution. Right now, what we’ve seen in the market, I don’t think they’re great consumer solutions yet. But it’s awesome to see everybody R&Ding around us and building these prototypes and developer kits to try to solve this.

Brendan Iribe, CEO of Oculus VR.

Above: Brendan Iribe, CEO of Oculus VR.

Image Credit: Michael O'Donnell/VentureBeat

GamesBeat: Once the Facebook deal closes, do you begin anything new?

Iribe: We just continue the same path that we’re on, but we have a lot more backing behind us, a lot more people behind us. Facebook supercharged our recruiting process. We were able to ramp up. I think we have 30, 40, 50 new hires in the last few months. We put out a blog post when we announced Jason joining with a list of this dream team. They’re all top talents. Brian Hook, Neil Konzen. There are so many incredible guys. Brian Sharp. I don’t want to leave anybody out, but it’s a long list of engineers and designers and artists that are all joining us.

GamesBeat: Do you have a sense of how many people it takes to make a VR game?

Iribe: You can do it with a team as small as a few people, like a mobile game. That’s just a very small experience. Then you can ramp it up to as large as you want, like a traditional console experience. I don’t think that the 200, 300, 400 person teams make sense right now when we haven’t even shipped a consumer product yet. It’s going to be smaller teams figuring out what works and what doesn’t.

This is such a new canvas and new platform. So many mechanics that worked in 2D don’t work in VR. A lot of it is around R&D and experimentation. It’s better for those teams to be small and iterative, to just sit there and innovate and fail a lot until they start to figure out the things that do work.

When we first started, two years ago, John Carmack showed off Doom 3 BFG running down hallways in VR. When we first saw it, we thought this would be it. You’re going to run down hallways and blow stuff up. Then, within a few seconds of trying it — well, that was pretty intense. Maybe we need to slow this down a lot?

As we’ve gone on, over the last two years, we’ve been slowing down the experiences, making it feel a lot more natural and comfortable. That’s important for developers to take note of. This is not a rocket-jumping VR world we’re going to live in. It’s going to be largely stationary experiences where you have incredible virtual worlds around you. You have your virtual avatars where you believe they’re real around you. You’re playing games and encountering experiences together. It’s not necessarily going to be rocket-jumping through the world.

GamesBeat: Do you think the user is going to be seated and stationary?

Iribe: We’re promoting a seated experience. I love to see Sony out there getting everyone to stand up, taking that step. We could have done that, but we felt that, from a safety perspective, it was better to message to the community, “Stay seated.” People can do what they want as they stand up and move around, but since you are replacing your vision with virtual vision, it makes sense to stay seated. We even joked that maybe we should be shipping seatbelts with this. You want to err on the side of safety.

GamesBeat: Augmented reality is also moving in parallel here. Do you guys have any interest in that?

Iribe: We’re focused on VR. You’ll see augmented VR come into play, where you start to scan in the world around you, or near-field objects. As soon as you can see your hands, you’re going to want to touch things and hold things and scan those items in also. That’s something that will come naturally, very quickly.

But the augmented world — it’s just a different experience. It’s a different use case. In the VR world, you can deliver the sense of virtual presence, where you truly feel like you’re present in a new space. You can’t do that in an augmented reality because it’s an overlay on top of real space. They’re just fundamentally different use cases.

We can focus on a lot of virtual-presence games and entertainment and experiences where your brain believes someone’s really in front of you. In AR, you can’t do that. They’re going to be a hologram floating there. Your brain will detect that they’re not really here. It will take many years – I would err on the side of decades – before you’re able to 100 percent match all the lighting and details of this world to believe, through a transparent set of glasses, that an overlaid object is really there. That’s what we call not tractable. We don’t know where to start doing that.

In VR, if you render the whole world in 3D, suddenly your brain says, “Hey, this all matches.” As long as the head tracking is precise enough, with low enough latency, I feel comfortable in the space. I’m going to believe that it’s real and that I’m here.

GamesBeat: In January or March, you showed DK2. That still had a bit of the screen-door effect. How soon will it be before you get that part taken care of?

Iribe: Consumer V1 will not have the screen door. We’re addressing that.

GamesBeat: Is this the same version here, or do you have something new?

Iribe: This is largely the same version in terms of hardware components, but the software continues to get much better. The tracking is better. Obviously the content is better. What we’re talking about here at E3 is content, games. Aaron’s been working with the community now for a year, which is awesome. That’s a lot of fun. We’ve been working with tons of developers in the community, creating content, and people are now starting to create made-for-VR polished experiences that feel very triple-A, very high quality.

Really, though, they’ve only had a few months to play with DK2 and Crystal Cove. Lucky’s Tale and a bunch of these games, these developers have only had weeks to months to play with some of the early prototypes of DK2. When we go out there and ship more than 40,000 DK2 preorders — the first day we start shipping we’re going to be on essentially the same order of magnitude in volume as the entire DK1 lifetime. It’s going to get out there in a huge way and get tons of developers excited and motivated to create great content. Then we’ll have a consumer product that shows up some time. Hopefully not too far away. It’s getting closer all the time.

The consumer product is going to be better in every way compared to the second developer kit. Just like the DK1 to DK2 was a pretty big leap — you’ve seen DK1. You even saw the early duct-tape prototype. Now DK2 is a huge leap forward. The consumer version is going to be another really big leap. That, for me, is the first time I got the true sense of presence. This gave me hints of presence, in DK2. Consumer V1 really delivers.

GamesBeat: And Mark Zuckerberg gets the first one?

Iribe: He joined forces with us to get rights to the future of Oculus VR with us, as a combined effort. He really shares the vision with us. He’s a really dynamic, smart guy. He shares the vision. That’s something we got that was unique to Mark and Facebook. Their CEO was excited from the very beginning, came down to visit and stayed super enthusiastic. We didn’t see that from Google or Microsoft or any of the other big companies. It made sense to partner with the person who was as enthusiastic as we were, who shared the vision. He turned around and said, “I’m all in on this. I’ll be as accessible as needed. Facebook will get fully behind this as the next compute platform.” That commitment was hard to turn down.

The thing that’s been great for the game space — we’ve had a number of people who’ve come up, people from big developers, publishers, console manufactures, and said, “Thank you so much, not just for doing Oculus and VR, but this partnership with Facebook is going to be very meaningful to the game space.” Oculus just became the second-largest company in gaming, all focused on VR. That’s pretty awesome.

snow crashGamesBeat: When you think about essentially building the Metaverse, Facebook is the most natural company to do that with. They have those social relations mapped. You can build that up into a universe, a world that could then be social and virtual? How far away do you think we are from that kind of virtual world?

Iribe: You touched on a key point. One of the reasons we also looked at this partnership was just the infrastructure that Facebook has. They have more than 100,000 servers. I don’t know exactly how many. They have this incredible network infrastructure, ways to scale and get these virtual worlds made. Going out and building that kind of network is very expensive and very challenging. They’ve done an incredible job of it.

They’ve also been focusing on security and privacy and all these different issues for a decade now. You don’t want to underestimate that. These are issues that are very challenging to solve, and they have a few thousand people working on those. And they’ve built out the world’s largest social network. You trust your social networks, at least your first degree of friends that you’ve accepted. They’re people you know, unless you just accept everybody. In general, they’re people you know, who you’ve met in life.

In VR, if you take this step forward to put on the headset and go out and have a face-to-face conversation or gaming experience with people in the Metaverse, you’re probably going to do it with your friends, to start. Then you’ll also do it with new friends you meet in the Metaverse. A lot of people are going to jump in and be more comfortable interacting with their friends. Having Facebook understand what that means, after spending a decade on the social network side, is going to be very meaningful for the VR space.

That’s not to say you have to log in with your Facebook ID. You don’t have to. But having that backing is going to be important and meaningful. We’ll see. We can use whatever we want and not use what we don’t want to. We’re staying largely autonomous as far as the brand and the team. But it is a partnership. We’re excited to leverage a bunch of their systems. I think they did $3 billion through their payment system last year, just on the gaming side? We don’t have to build a payment system. That’s pretty nice. We have to build a part of one, but we don’t have to go through a lot of the challenges they’ve gone through as far as handling God knows how many currencies and so on.

Lucky's Tale from Playful

Above: Lucky’s Tale from Playful

Image Credit: Playful

GamesBeat: Do you have an idea of what’s attractive on the non-game entertainment front?

Iribe: Right now we’re focused on gaming. This is going to be the place where VR gets kicked off. It’ll be the majority of the content in the early days – all centered around gaming. If you think about it, even a decade from now, the technology of VR is built on a game engine. It’s a 3D scene that you’re rendering. That’s largely going to be built on a 3D game engine, because they’re the best 3D engines in the world. In the beginning it was SGI and Evans & Sutherland and some of the professional markets doing the 3D rendering engines. Now it’s the game market. This is going to be built around the game market for a very long time.

Education will be one of the bigger areas as we move forward. We have a big plan for supporting academia and universities, going out and helping to evangelize VR science from a research standpoint. If you look at the objects in VR, you believe an object. Your brain says, “Yes, this object is right here.” Suddenly you can scan in all kinds of objects and have an incredible educational platform built around that. Imagine scanning in the Smithsonian. There are so many things you can bring in and share and talk about.

Aaron Davies:  Let’s get the demo started. Right now you’re in the starting screen for Lucky’s Tale. This is fully immersive as well. You can lean forward, look all around, and see what the level looks like, see where you’re going to be exploring. Hit the A button to start. The controls are simple. With the left thumbstick, move the character around. Jump with the A button. If you hit the trigger in the air, he’ll do a stomp. If you pick up something, you can press Y to throw it. That’s pretty much it.

We have positional tracking now, so if you want to lean forward and look closely at something, you can do it. You can move side to side.

Iribe: What do you think? It’s like a cute little toy that you get to control.

GamesBeat: Are you guys thinking about the possibility of virtual reality as a form of gaming addiction? Things like World of Warcraft wound up having a powerful effect on some people. Virtual reality could take that much further.

Iribe: It’s going to take a while before people are able to spend long periods of time in VR. It’s still early days right now, so it’s something people are only going to be able to enjoy for maybe 10, 20, 30, 60 minutes at a time. That said, for many people, you want to have a comfortable, happy, fun life. If VR brings you a lot of happiness, then why not enjoy it as much as it’s healthy to enjoy, as it becomes a more mature technology?

People sure do spend a lot of time watching TV. The average hours that people watch per day is kind of mind-blowing. If people substitute VR, something that’s much more social and interactive, for just sitting in front of the TV, is that a bad thing? People spend how many hours now staring at their phones? I spend an obscene amount of hours staring at my phone these days.

I can envision cases where people are potentially going to have some kind of illness or disease, whether they’re old or they’re young, something that separates them from their family. Now they’re going to be able to throw on a pair of VR glasses and see their parents or their children. That’s going to bring a level of happiness to so many people that are otherwise largely alone. I can imagine a lot of possibilities where this will add something to people’s lives. It’s going to be a lot of fun.

Early screens of Eve: Valkyrie in action.

Above: Early screens of Eve: Valkyrie in action.

Image Credit: CCP Games

As the technology gets better, in some decade or two, when all of this is possible in a pair of sunglasses — the whole world wears glasses, right? Nobody has a problem wearing a pair of Ray-Bans in terms of the form factor. When we can put a new set of virtual frames that’s totally comfortable, totally believable virtual vision in a pair of sunglasses, it’ll be a new world for people to enjoy. The exciting thing is that it’s limitless. We’re not stuck to the earth. We’re not stuck to one world.

It’s fascinating to think about virtual presence and a game like EVE Online. EVE Online is a whole world they’ve crafted, a believable world. To some number of hundreds of thousands of people, this world really does exist. The players are thinking about it and trying to convince their brain that yes, this is a real place. But at some point, their brain says, “No, this is a monitor. No, this is a TV screen. It really just exists in this fantasy.”

Now, for the first time, with VR you have a true sense of presence. Your brain will say, “Yes, this is real.” You’ll have to be there going, “No, no, remember, this is not real.” That’s an experience you can’t get from any kind of 2D surface, whether it’s a movie or a game. You can’t do it with augmented reality. You can only do it with VR. A game like EVE Online can become this real place where you go and be social. When you take the glasses off and go about your day, your brain will remember it as a real place.

What inspired me around VR, when I first saw the very first demo, was the thought I had when I took it off — the creative thoughts I had about what this was going to enable, what people were going to create. What if you made this? What if you did that in VR? Even more important and more powerful than just me feeling that way, though — I took it around as a duct-tape prototype and showed it to developers at Epic and Unity. We showed the guys at Valve. Suddenly every single person had the same reaction. They took it off and said, “What if you could do this?” Everybody had an idea coming out of the experience.

It’s only gotten more compelling and more powerful as we’ve gone on. It’s only encouraged more creativity. To see people’s reactions when they take it off – “I can see how this is going to change things” – I’ve never seen another technology have that effect on people. If you give somebody a cell phone, they say, “Wow, this is great. Now I can call a taxi from down on the street.” When you put on Oculus and get into VR and get that sense of presence, people are just streaming with ideas when they come out of it. They’re dreaming about these things. That’s why I think this will be the most powerful platform of all time. Everyone has an idea for it.

GamesBeat: For me, the closest thing might be the Internet, the way it started connecting people. I wonder if that level of imagination now is just changing again.

Iribe: I think we’ve seen PC, Internet, and mobile. But it’s never been as visual as VR. With the internet and everything else, there were people in that world and that space who could project and think, “I know exactly what I’ll do with the web.” But the difference is, it’s not just professional developers. It’s mainstream people. Everybody feels that way. A consumer takes it off and they’ll have awesome ideas, where you think, “That would be cool too!” It’s a widely shared step function, as opposed to just a professional step function. Everybody has an idea.
How Oculus Solved Virtual Reality

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