Zuckerberg reveals the details of the Facebook VR strategy

The correspondence between Facebook CEO Mark Zuckerberg and his immediate subordinates, which fell into the hands of journalists, revealed the company’s strategy in the field of virtual and augmented reality, implemented since the acquisition of Oculus VR.

Why did Facebook buy Oculus? Why did the social network, the accumulator of information about people, spend two billion dollars on the manufacturer of dubious hardware at that time? These questions were asked more than once by not only users, but also by market analysts who needed to understand in which direction the investment wind is blowing.

TechCrunch reports that in 2015 Zuckerberg sent a four-page e-mail to the company’s management, outlining the immersive market strategy. The document was unveiled by writer Blake Harris (Blake Harris), who accessed it and thousands of other materials for the book The History of the Future on the times of the emergence of the modern virtual reality industry.

The letter shows that Zuckerberg’s commitment to immersive technology is motivated by the desire to surpass the technical giants Google and Apple in an area that the CEO in correspondence and publicly calls “the next big computing platform.” This is a move in a long-term strategy:

The strategic goal is absolutely clear. We are vulnerable to Google and Apple on mobile devices because they make basic mobile platforms. We would like to have a stronger strategic position in the next wave of computer technology. We can achieve this only by creating both the main platform and key applications.

I will talk about the main elements of the platform and the main applications below, but for now keep in mind that we need to succeed in creating both the main platform and key applications to improve our strategic position on the next platform. If we create only key applications, but not a platform, we will remain in our current position. If we build only a platform, but not key applications, we may be in a worse position. We need to build both this and that.

From the point of view of time, it will be better for us if the next platform becomes ubiquitous as soon as possible, and if as short as possible, especially in the mobile world, there will be a period of dominance of Google and Apple. The less it lasts, the less the community is vulnerable to the actions of external forces. Therefore, our goal is not only to win BP / DR, but also to speed up their arrival. This is part of my rationale for acquiring companies and increasing investment as quickly as possible, rather than waiting for companies to move on. By reducing this period, we reduce the risks of our vulnerabilities on mobile devices.

Zuckerberg's correspondence revealed the details of the Facebook VR strategy

Facebook users by this time very often logged into the social network and other services of the company via smartphones and tablets on iOS and Android, fully controlled by competitors. The situation became apparent when Apple blocked the Facebook application from accessing its operating system data, finding out that using it violates an inter-company agreement. Similarly, technological import substitution in Russia was initially aimed at reducing the country’s vulnerability to the possible manipulation of foreign companies controlling the largest ecosystems.

Possession of the platform and key applications on it means deep control over the ecosystem, and Zuckerberg wants all power to be in the hands of Facebook. Since smartphones have already reached maturity, it’s too late to break through on them, so Facebook is planning to bet on virtual and augmented reality until 2025, which promise to become the main means of information consumption in the future. As shown in recent years, while the former leaders are losing to the more efficient Zuckerberg.

The following is a more detailed description of the views of the CEO on the main paradigms of the new market:

Key applications are what you expect: social communication and media use, especially immersive video. Games are critically important, but they are more controlled by random factors and ephemeral, so possession of key games seems less important than the simple belief that they exist on our platform. I expect everyone to use the tools of social communication and media consumption, and that we will build a big business if we are successful in these areas. We will need large investments and a special strategy to create the best of these services. At the moment, I argue that the creation of social services is our main competence, so I will leave further discussion of this for another day.

The platform concept is based on key services that use many applications: identification, content and avatars, app distribution store, advertising, payments and other social functions. These services have the common properties of network effects, scarcity, and, therefore, monetization potential. The more developers use our content market, application store or payment system, the better they become and the more efficiently we can earn money.

Our common vision of this sphere is that we will absolutely everywhere find ourselves in killer applications, we will have a very strong coverage of the platform with services (like Google with Android) and will be strong enough in equipment and systems to at least support the goals of our services on platform, and at best, make them an independent business.

Zuckerberg states that he “supported the acquisition of Unity,” one of the leading engines for regular gaming and VR content. Further, he “outlines the advantages of owning Unity”, including the possibility of developing by Facebook the immersive content of “world class” necessary for the above task, as well as the chance to gain a foothold at the most basic level – at the developer level. Just as developers who deeply rely on Google Play services are more likely to use the new Play Services API, developers who rely on Facebook services are more likely to stay with Facebook and follow its policies.

Arguing for the acquisition of Unity, Zuckerberg also discusses what can happen if Facebook does not:

On the other hand, if someone else buys Unity or a leader in some basic technological component of this new ecosystem, we risk being completely ousted from the market if this customer is hostile and the devices do not support us. Again, the statement that Unity no longer supports Oculus would probably not be inevitable, but Google or someone else will simply never give priority to improving integration with us.

To some extent, this disadvantage is such a serious vulnerability that it is probably worth the cost of simply reducing this risk, even if the transaction is not accompanied by all the positive aspects that we had foreseen from the beginning.

Given the general possibility of strengthening our position in the next big wave of calculations, I think that this is an explicit call to do everything possible to improve our chances. A few billion dollars is a lot, but we can afford it. We have built our business for the sake of creating new great things for the whole world, and this is one of the greatest things I can imagine created by us for the future.

Despite Facebook’s clear success in expanding the popularity of the Oculus mobile and stationary platform, Zuckerberg has not only acquired Unity over the past four years, but has also missed more than $ 500 million in investment in this developer, making it a much more expensive potential purchase.

Zuckerberg reveals the details of the Facebook VR strategy

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