On Oculus, Valve and Revisionist History

by Augmentl, 26th May 2016.

There is a new a bedtime story for the age of Virtual Reality. It goes a little something like this:

"Once upon a time, there was a young Magician, who wanted to build a pair of magic glasses.

But no matter how hard he tried, his magic glasses would make people feel bad.

So he turned to a wise old Wizard, and his team of busy elves, who shared with him the secret to building magic glasses that made people feel good.

But then the young magician was hired by the Evil King, and took Wizard's secrets with him. He built the King the best magic glasses in the kingdom, without giving the Wizard or his elves anything in return.

This made the Wizard very angry, and so he sent one of his angriest elves to bad-mouth the Magician on Twitter at every opportunity.

The End "

I didn't say it was a good bedtime story. But the newly popularised saga of how Oculus appropriated Valve's VR technology during its early days and then proceeded to turn it against them following the Facebook acquisition, while a cute little tale, smacks of revisionist history. Valve's Alan Yates and his anti-Oculus statements, rather than highlighting Oculus and Facebook's implied duplicity, smack in fact of sour grapes and missed opportunities.

What history boils down to is this. When Palmer, Carmack and the scrappy little VR startup that would later be bought by Facebook for two billion dollars were struggling to solve the motion sickness issues plaguing their early VR prototypes, Valve stepped in and, in the spirit of collaboration, shared one of their own VR prototype, a dual-screen contraption that seemed to solve the problem.

Oculus then ran with the concept, and used what it learned from it to accelerate its development of a polished consumer VR experience. When Facebook acquired Oculus a few months later, the major cash influx resulted in both an extension of the Rift's scope (from an improved DK2 to what it is today) and Oculus's overall ambitions - to be not only a provider of the best possible VR hardware for consumers, but to become the de-facto marketplace for the digital distribution of VR content.

That last part, which materialised in the form of the Oculus Home digital storefront catering to all of the Rift's exclusive content, is the part Valve is taking issue with. It is clear that Valve's original intentions in sharing their technology was to foster the development of a hardware ecosystem that would have created yet another avenue with which to expand their Steam digital distribution quasi-monopoly. What Valve did not expect was for Oculus to step on their storefront's turf.

But this is where the the whole Good vs. Evil narrative falls flat. Back then, Valve also had no interest in getting their own hands dirty with actually making VR hardware. Manufacturing is hard, and in the Valve business model it is more profitable to just license the Steam platform (say, to the so-called and wildly unsuccessful Steam Machines) than it would be to manufacture actual hardware.

Were it not for Palmer's scrappy team of dreamers, in fact, VR would in all likelihood still be some ridiculed concept on the trash heap of discarded technology ideas: a toxic technology no sane person would wrap their business model around. In Michael Abrash's own words (Oculus's chief scientist and one of three high profile Valve defectors to the company):

"In the space of two years, a relative handful of people at two companies, none of them VR experts at the start, somehow managed to resurrect VR from the trash heap of technologies-that-never-were and make it the most exciting technology around. That wouldn't have happened if Palmer hadn't developed his prototype. If John hadn't been investigating VR at the right time. If they hadn't run into each other. If I hadn't been looking for a new platform."

So while it is absolutely true that Valve's early research was significant, some may even say critical, to the development of the Rift as it is today, it is also true that, had Valve not shared their work with Oculus, Valve's early VR prototype would have remained just that. Valve needed Oculus's momentum if they wanted to realise that early VR research into an actual market opportunity for their core business asset, the Steam digital store.

Left to their own devices, Valve would likely not have ben able (or willing) to take their VR prototype to the next level: not without Oculus's fervent evangelism of VR, their unprecedented Kickstarter campaign, Facebook's subsequent $2bn validation of a fledgling market previously seen as poison, and the ensuing gold rush that seeded the market with a veritable abundance of hardware manufacturers eager for a piece of the action - one of which was none other than HTC.

Why else would Michael Abrash, Atman Binstock and Aaron Nichols, Valve's own VR dream team, have felt the need to defect to Oculus in order to realise their passion? Because they knew Valve's own commitment to making VR happen would not match Oculus's.

Alan Yates, the architect of Valve's Lighthouse solution for the HTC Vive, has been very outspoken in trying to remind the world that Valve's early research is responsible for much of the Rift's core technology. But Yates also conveniently fails to acknowledge that research, no matter how critical, is only as good as its execution.

Without Oculus's achievements in validating the whole VR market opportunity and defining the highest standards for the VR hardware and software experience, Valve would not have a found a partner in HTC. Neither would Valve have VR industry to help foster, or a VR consumer base to which to market its wares. Without Oculus, Valve's early VR prototype would likely be collecting dust in a cabinet somewhere while the company mulled how to best expand into the mobile gaming market.

So yes, Valve handed Oculus some core technology two years ago. But Oculus handed Valve (and the whole industry) the most disruptive and significant market opportunity since the advent of the smartphone.

I'd say the debt is paid in full.