Interview: Oculus VP On Moving Forward After A $500 Million Settlement

Oculus has had a rough couple weeks. Facebook's ambitious VR subsidiary recently lost a lawsuit to Bethesda Softworks' parent company ZeniMax Media and has been ordered to pay $500 million in damages (though only $250 million of that total sum falls to company itself). Even more recently, ZeniMax filed a separate suit that, if successful, could block Oculus from selling its Rift headsets, which ZeniMax believes were developed using "stolen tech."

But Oculus seems resilient in the face of adversity. The company today announced an immediate, forward-looking price drop and, just a few days ago, hosted a software showcase to mark the opening of this year's Game Developers Conference--an apparent affirmation of its commitment to cultivating a rich library of games for its platform. GameSpot caught up with Oculus' VP of Content (and original Naughty Dog co-founder) Jason Rubin at this showcase to discuss the lawsuits, the price drop, and the future of both Oculus Rift and VR as a whole.

GameSpot: As much as I want to talk about games, I have to address the elephant in the room, which of course is the recent lawsuit. I imagine you can't really comment on the specifics of the case, but I am curious how this settlement will impact the future of the business. How do you move forward after a relatively large monetary loss like this?

Jason Rubin: To be honest, you probably know more than I do because I have been focused on content and focused on driving VR into the marketplace. So to answer that question, I can best say or quote Sheryl Sandberg, the COO of Facebook, who said, "It will not materially impact our business."

That may be, but it still seems like it will be difficult for any company, including one as big as Facebook, to shrug off $250 million of what overall will be a $500 million settlement. That's a significant amount of money. Will that cause investors to re-evaluate Oculus as a company?

I think the best thing to do is go back to Sheryl's quote. "It will not materially impact our business."

Late last week, ZeniMax filed another, separate lawsuit that seems to be an effort to halt sales of Oculus units and software. That would obviously have a material impact on the business. I was curious if you're able to comment on that recent suit.

Yeah. We're not worried.

The other major news for Oculus this week is the price drop. It seems like you see lowering the price as probably the number one driver towards mass adoption. What maybe are the number two or three priorities that will allow you to achieve that in the long-run?

A lower price without good content is meaningless. So content and price interplay with each other. That's the most important thing. Let me just point out as well that a year ago when we had this event, there was no Rift, and when we launched Rift a few weeks later, the price of a PC that was a rec spec was $1,000. That PC is now $699 last time we did an announcement, and you can probably get them cheaper because it's been a while since Oculus Connect 3 when we did that announcement. We've also created a new min spec based on ASW [Asynchronous Spacewarp] that brings the price of some of those PCs down in the $500 range.

A huge number of developers are now intent on developing for VR. They need hardware out there so that when they develop, they can get a return on an investment. Price and content are what drive that.

But Oculus also has new hardware in the pipeline. For example, the Santa Cruz wireless headset. What role are new hardware developments going to play going forward? As you said, you are in this for the long haul, and that inevitably means more hardware in the future.

It is inevitable that new hardware will come out. Santa Cruz... We're still exploring inside-out tracking. We're still working on those technologies. There are other ways of looking at the business that we don't necessarily agree with. Oculus believes better content, better price on our current hardware is the right way to get people into the market.

Dean Hall, the creator of DayZ, commented on VR development back in December saying that, quote, "There's no money in it" for developers. So how do you keep developers coming to your platform and creating the content you need to grow the market?

Right. So I actually don't know that Dean said that, so I'm going to ignore that quote and answer the broader question. I said at DICE a few days ago that betting the farm on VR if you don't have a good business plan isn't the most brilliant decision to make right now. So we certainly understand that there's a need for developers to make money.

Having said that, a lot of developers who either have a good business plan--i.e. they've found funding or something else--or developers who are splitting their time are enjoying incredibly their work in VR. The recent GDC surveys showed that a shocking number of developers are intent on VR development considering the install base. But again, the way to solve this problem is really, really clear. Better content driving more users, which creates the ecosystem that can make money in VR, and we think, again, lowering the price and increasing the quality of software gets us there.

At the same time, you have Owlchemy who's made more than $3 million, they say, in gross on a title that did not cost them $3 million. We have developers that have made significant profits. So again, a lot of it depends on your business model. What I think is happening to a certain extent is that game development just is hard. It is a hard business. I was a game developer. I had my highs. I had my lows. Right now there isn't a fantastic place in the market if you're not established, so, for example, being in mobile right now is a really hard market if you're a developer. A lot of developers that haven't been able to toe the line in other markets are basically saying, "I don't know what to do. Here's this new thing. I'm going all in."

My point at DICE was, that's not right now your solution. So maybe these developers could've had a hard time in mobile and they've simply switched, Hail Mary, to another platform and it hasn't necessarily in all cases been great for them. But I don't know that that's necessarily an indication of VR's current position for all developers.

I think Resident Evil 7 is a really interesting recent example of a very recognizable franchise going all in on VR. How important will titles like that be to Rift going forward? Are you looking to get major, established IPs onto Rift?

We absolutely are looking at major IP, and we understand the value of it. One of the weaknesses of major IP is that it's tied to an established gameplay design and an established mindset around what it is. One of the reasons that Naughty Dog, my old company, abandoned Crash when it went to Jak & Daxter was because Crash had been designed for PlayStation. When we looked at taking those characters to PlayStation 2, which was radically more powerful, we asked the question, "Is that the best character design?" Mario has done an admirable job of kind of going along, but as a character, Mario is stuck in the “I don't really talk, I don't have these other things going on” that as you progressed in video games you would have wanted him to do.

As we look at standard video game design and the games that are beloved in standard video game design and try to put them in VR, sometimes we run into problems because the gameplay mechanic that worked and made them fantastic games in 2D doesn't work in VR, which is a very different medium. And to strap a big name onto something and then have a totally different game I don't think is valuable, and in some cases, taking the same gameplay and putting it into VR is uncomfortable or has other problems attached to it that make not the greatest use-case for the broadest market.

So while absolutely big IP is always on our mind and we certainly will do things with big IP in the future, we're very mindful of the fact that some IP is trapped in itself as a design and not to get caught up in the fact that it's a big IP.

The Oculus Rift has officially been on the market for 11 months now, so I was curious if you could rate the first year for us.

I think it's been a very solid year. We launched a hardware that does something that nobody really understood and no one understands without putting it on their head. It was always going to take a while for VR to be massively successful. We still believe it's going to be massively successful. Unfortunately, the way that software and hardware launches around tech generally work is, before it comes out, there's a massive amount of hype, and people who aren't directly involved in the business sometimes get out of control with the hype--almost consistently get out of control with the hype. People in the business kind of just, they say, "This is a long-term thing." So you get this hype bubble. When it comes out, reality strikes. Price. Content. We always knew this was the case.

"While absolutely big IP is always on our mind and we certainly will do things with big IP in the future, we're very mindful of the fact that some IP is trapped in itself as a design and not to get caught up in the fact that it's a big IP." -- Jason Rubin

Compared to how we expected, we've done extremely well, extremely well this year, and the software has progressed faster than I thought the software was going to progress, which I think is the most important thing. So coupled with the price drop, I think our first year sets us up for a fantastic second year, which will mean a bigger library, more content. It sets us up for a future discussion of price, and I think sets us up in the long run to bring VR to the masses. The most important thing to us in this first year was how people who use the hardware [and] software reacted to it. Had they said, "Eh, it's not that special to me," that would've been a problem. It's exactly the opposite.

We've talked a lot about the idea that VR is this sort of nascent platform that needs more time to develop. With that in mind, how do you view other VR headsets, like Vive and PS VR? Obviously they are very much competitors because you are competing for dollars and operating within the same space, but at the same time, you're kind of all on team VR, right? So how do you reconcile those two things?

I think right now is a time for all of us to invest in R&D, figuring out what content works for the public, and build VR. We've announced that we've joined the Chronos Initiative to talk about an open standard. One of the first presentations was our presentation. We're trying to push towards an open standard that everybody can use.

But right now we're really focused on pushing VR forward as fast as we can. So ATW [Asynchronous Timewarp], which we said was a major feature that helps people get a better VR experience. Some of our co-conspirators in the VR world said, "No. That's a crutch. We don't think it's useful." ATW is now the standard. ASW--which we believe helps people get in at a lower price point and also makes it a more comfortable, smoother experience--we believe is also going to be really important.

So the way that we look at the industry is not to really worry about everybody else who's in the industry but simply to focus on doing the right things as quickly as we can to get to answers. We really kind of just look at what we're doing.

Still, according to certain reports, Oculus didn't sell quite as well as some of its competitors in the past year even though Vive, for example, actually costs more. To what would you attribute those numbers?

Well I don't know which numbers you're quoting, but what I would say is this: we're like five or ten minutes into the first quarter. If somebody scored or somebody's not scored, it's kind of irrelevant. There's a lot of game left. So you know, I think that numbers are irrelevant. What's going to happen this year could easily utterly change whatever the current lineup in terms of sales units is. What we think is most important is software and price. We are aggressive with software. We are aggressive now with price. I think that's going to change things.

What's your favorite thing to do with Rift right now? When you put on a headset, what are you doing?

So there are two things that I do a significant amount of. One is, I play Dragon Front and spend a lot of time talking to the person I'm playing with. So it's a collectable card game. We're updating it for Touch. It's also out on Gear VR. And it is amazing how personalities telegraph through the game. So I was playing Dragon Front against a Gear VR user--and Gear VR has no positional tracking, so I can tell if they're on a Gear VR or a Rift because their head will move differently. Generally I say, "Hi, I am Jason Rubin, would you like to talk?"

"The most important thing to us in this first year was how people who use the hardware [and] software reacted to it. Had they said, 'Eh, it's not that special to me,' that would've been a problem. It's exactly the opposite." -- Jason Rubin

One of these people just wouldn't talk. Just would not talk. His mic was off and he just wouldn't talk. He was a really annoying player. Like he knew what he wanted to do, [but] he'd wait his time out trying to get me to quit because I was bored. Just a jerk, right? He was good, and he had played a lot more than me and he was basically winning. You have hit points in your castle. I was almost dead. He had his full castle completely untouched.

Well my character, my group I was playing, had an invisible character, and I don't think he realized what you could do with that invisible character. I had saved up my cards, and I did this one-turn thing that just decimated... He was going to beat me in the next turn, literally the next turn. He had his three characters in the front row. I had no way to defend myself, but I beat him in one smack. And his character starts doing this [shakes head] and you could see the head jerking around, and even without the mic, the emotion came through. I could feel his agony in a way that only VR can telegraph. Only VR. And it was glorious.

One thing that has been an interesting point of focus for VR in general is: applications outside of games--everything from having wearable headsets on airplanes for people who are afraid of flying to even medical uses. Is that something that Oculus is pursuing or interested in?

Absolutely. When you're talking about the next computing platform, you're talking about all of those things. There are going to be a lot of things that we can't even consider businesses yet that are going to spring up out of VR. And when you talk about the next computing platform, you really have to think about all of the things that have been made possible by a mobile phone and what VR's version of making things possible that were not possible before are going to be. And absolutely: medical, education, architecture, real estate, virtual travel--there's an infinite number of these things that are extremely interesting. Entertainment is going to drive it into their homes for now, and that's what we're working on here today. And better pricing. So that's why we're focusing on those two things.