The year’s not half over and we’ve already seen word of two 10-digit gaming acquisitions — Facebook’s purchase of Oculus VR in March for $2 billion and YouTube’s reported, but not yet officially confirmed, $1 billion-plus interest in Twitch.
At first glance, Oculus and Twitch are totally different animals — one makes a virtual reality headset, while the other hosts videos of people playing videogames. But the two companies are more similar than you might think.
I demo the Oculus Rift frequently and am often intrigued by Twitch’s quirkiness, but people who haven’t tried one or both are often confused why big companies would want to acquire them for so much. The repeated past failings of VR and the “that sounds dumb” attitude toward watching people play games breed cynicism. To understand Oculus or Twitch, you have to try them.
More than that, both also depend on prior experience. I have no doubt that a non-gamer could be impressed by the Rift, but for all the chatter about social experiences in VR, the steady drumbeat of hype around the technology has come from gamers. Seeing unofficial VR versions of beloved childhood games is an accessible teaser, for the people who have played those games, of things to come. Similarly, watching a game on Twitch makes barely any sense if you haven’t played the game before. It’s no accident that the most popular game on the site, League of Legends, has 67 million people playing it every month.
Those prerequisites aren’t true of WhatsApp, which Facebook recently bought for $19 billion, or Nest, which Google dropped $3.2 billion to acquire. Gaining a must-have mobile app and a hot Internet-of-things startup? That makes sense on the surface, and you don’t need to try those products to “get it.” Oculus and Twitch are more like faux-exclusive clubs with extremely passionate members.
And the members of both of those clubs are worried. Within hours after Facebook’s acquisition of Oculus, diehards were swearing off it and a prominent developer cancelled a planned game for the system. Gamers fear that Facebook’s social ambitions will corrupt the eventual content pipeline for Oculus (whenever it’s released to the public, that is), with Facebook CEO Mark Zuckerberg calling gaming “a start.” Likewise, Twitchers have fretted that their gaming community will be poisoned by YouTube’s insistent Google+ integration efforts and more stringent copyright policies, which have previously been abused or misfired.
The flip side of these fears, of course, is that a bigger company with more resources will let Oculus and Twitch do things they currently can’t. Facebook had pledged the dough, and the patience, to mass-produce the Oculus Rift and sell it at cost, even if that means losing money on it for years. We still don’t know if or how Twitch would be integrated into YouTube, but Google has a lot of servers to allocate to game streaming, and its deep connections to the media world may make resolving copyright disputes (which were likely to hit Twitch one way or another, in time) easier.
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