The reception that the Rift got was rapturous. "The level of immersion was unlike any other gaming experience I've ever had," one site wrote. "It transforms the experience of playing a first-person videogame," another wrote. "When we look at that now," Carmack says, "it was clearly the inflection point." Overnight, the Oculus Rift became the most hotly anticipated gaming device since the Microsoft Kinect.
It was time to get serious. Luckey joined forces with an executive team, Iribe among them, and formally established the company—he was now the founder of Oculus VR Inc. They also upped the ambition of their Kickstarter campaign: They would still send DIY kits to their early backers, but they couldn't expect developers to start building games for a device they had to construct themselves. So they decided to fund a fully assembled product, promising a complete kit to anyone who pledged $300 or more. The campaign video featured some of the most respected people in the gaming industry, like Cliff Bleszinski, then design director of Epic Games, and Valve head Gabe Newell, singing Oculus' praises. Hours before the campaign went live, Luckey got nervous and lowered the funding threshold from $500,000 to $250,000. Within hours the company blew past both on its way to more than $2.4 million.
Since then, the team has made even further headway on some of VR's most intractable problems. They hired Nirav Patel, an Apple engineer who had been working on a motion tracker that used a gyroscope, accelerometer, and magnetometer to sense players' head motion. At Oculus, Patel helped design the brain of the Rift, a tracker that sampled motion data so fast that Oculus could use algorithms to predict a player's head movements and pre-render images, shaving latency by precious milliseconds. Oculus also switched from LCDs to AMOLED displays, allowing the Rift to reduce latency and motion blur simultaneously. The team used a small external camera to track the headset itself, doing away with fiducial markers. But perhaps the biggest breakthrough wasn't technical at all. In 2013 Carmack decided to leave id Software, where he had worked since cofounding it in 1991, and join the Oculus team as CTO. It was an eyeball-popping PR coup, but it also meant Carmack could dedicate his engineering skills—the same ones that made Doom and Quake such historic landmarks—to improving the Rift.
By mid-October, the momentum was unstoppable. That month Iribe stood up at a gaming conference and announced that the Oculus Rift would be a "no-motion-sickness experience." It was an audacious promise, and one that caught the attention of Brian Cho, a young partner at Andreessen Horowitz, who was sitting in the audience. The VC firm had turned down an earlier opportunity to invest in Oculus' Series A round. After hearing Iribe's announcement, the firm reached out and asked for another demo. Chris Dixon was among the six Andreessen Horowitz partners who got a look at the new model. "I think I've seen five or six computer demos in my life that made me think the world was about to change," he says. "Apple II, Netscape, Google, iPhone … then Oculus. It was that kind of amazing." By December, Oculus had closed Series B funding—with Andreessen Horowitz leading—for $75 million.
It's April 3, nine days after Facebook announced its purchase of Oculus. But not much has changed here at the company's HQ in Irvine. Luckey, now 21, still rolls into the office around 11 (after which he'll work a 12-hour day). The common areas are festooned with all things gaming, from framed posters to signed art to oversize Gears of War figurines. The conference rooms are named after pop culture's greatest virtual reality dreams—Star Trek: The Next Generation's holodeck, Snow Crash's Metaverse, Ready Player One's Oasis. The open kitchen, while bountiful, skews Engineer: cinder-block-sized containers of Red Vines and packets of Kirkland-brand Variety Snacking Nuts make it clear there's a Costco nearby. Outside, the April morning is as blue and clear as Orange County usually delivers. On the face of things, last week's acquisition has left the workplace largely untouched.
The Facebook deal moved incredibly fast; Zuckerberg first tried on the latest prototype in February. When Luckey heard about his interest, he was skeptical. "It's not the first thing you think," he says. "'Wow! Facebook! That's exactly who I would have imagined to be a good partner!' So they did run the ring of fire a little bit convincing us."
Over the course of many conversations during the next several weeks, though, Zuckerberg won Oculus over. "I had heard many times that Mark is a laser beam, that Facebook is all he thinks about day in and day out," VP of product Nate Mitchell says. "So when I first met with him, I thought he was going to be like, how do we get News Feed into VR?" Instead, the person who showed up was someone Mitchell calls "Visionary Mark Zuckerberg," who saw virtual reality as not just a gaming tool but as a full-fledged communications platform. The Oculus team agreed; they may have started out trying to build a great gaming device, but they realized now that they were sitting on something much more powerful. Zuckerberg seemed to understand that, and he also seemed to understand that it had potential far beyond being an extension of Facebook's existing social-media service. "This isn't about sharing pictures," Luckey says. "This is about being able to share experiences." The deal was consummated over an eight-day stretch in mid-March. Iribe was so excited about the acquisition that he revested 100 percent of his own equity for a five-year period, guaranteeing that he'd be with the company for the foreseeable future; Luckey, Carmack, and others took similar steps.
But not everyone was so optimistic about the partnership. Within minutes of the announcement, Oculus' site was filled with angry comments. (The top one read simply: "DO NOT WANT.") Backers threatened to cancel their pre-orders, to never buy the Rift, to throw their purchasing power behind Sony's Project Morpheus. Some of this was gamer snobbery, rooted in the assumption that Facebook would dumb down the Oculus experience, loading it with targeted ads and 360-degree 3-D versions of FarmVille. Some of it was fear that their gaming device would wither away in the Facebook catacombs, forgotten by a young billionaire mogul with buyer's remorse. And some of it was the fury of backers spurned, people who had ponied up to support the original Kickstarter campaign, only to see their investments made irrelevant by a deep-pocketed corporation.
But the Oculus team argues that, far from threatening the device's future, Facebook is helping to secure it. "Every VR product has been a failure," Luckey says. "Nobody lending money for manufacturing looks at Oculus and says 'I can loan you $250 million!' Because they know the safe bet is we're going to fail, go bankrupt, and take hundreds of millions of dollars with us." Now Oculus doesn't have to worry about getting loans at all. And Facebook's backing has helped the company attract people from top game studios. Within a week of the acquisition announcement, Michael Abrash, the Valve engineer who spearheaded that company's VR research, became Oculus' chief scientist—joining colleague Atman Binstock, who'd gone to Oculus earlier in March. Along with a third former Valve engineer, Aaron Nicholls, they are working at an Oculus R&D lab in the Seattle area.
Facebook's money also means that Oculus doesn't need to worry about turning an immediate profit—and that will come in handy as it builds its first consumer product. "Let's say we're trying to pack in everything we can for $300," Mitchell says. If the device needs to be profitable, then the company couldn't spend much more than $100 on the hardware itself. But now that it doesn't need to preserve its profit margin, Mitchell says, "you can take all of that margin money, apply it to components, and still keep the price exactly the same." In fact, according to Luckey, the consumer version will be "higher-quality in every aspect" than the prototype that Valve showed Iribe last year. While Oculus' internal units have used twin AMOLED 1080p displays from Samsung Galaxy S4s, the company no longer has to depend on the mobile phone ecosystem; it now has the money and the backing to ask a manufacturer to create custom displays specifically for VR applications.
Oculus is also working on a second, outward-facing camera that will be part of the headset itself. The Valve prototype used such a camera to read fiducial markers on the walls for tracking, but Oculus seems to intend it for very different applications. For one, Carmack says, it can function as a pass-through camera, allowing Rift-wearing users to see what's happening in the real world—a kind of external heads-up display that would allow you to grab a soda, for instance. But it has other, much more interesting potential uses. Right now the Rift allows players to look around a virtual world; to move through it, they use an Xbox controller. But a front-facing camera might allow the Rift to someday track users' gestures instead—like a Kinect, but more powerful. "In the early days of VR, it was all goggles and gloves," Carmack says. "Nobody's talking about gloves now—it's going to be done with optical tracking. You want it to feel like a virtuoso with an instrument." Add haptic feedback, which the company is also developing, and you've taken a giant step toward achieving true presence. Players will be able to engage with virtual worlds—and have those worlds engage back—unencumbered.
But what those worlds look like isn't up to Oculus—it's up to partners and developers creating the experiences that we'll have within the Rift. And already they're finding that the future of virtual reality might not look like anything we've been led to expect.