Competitors with Different Goals: Valve versus Oculus

The recently announced HTC Vive looks to be a strong technology competitor against the highly anticipated consumer release from Oculus in the PC space. While Oculus has long-ago stated that they are working to deliver their consumer VR headset at a lower margin, possibly even at cost, HTC/Valve has announced their entry of a premium VR experience.

A Different Focus

What is overlooked by many is that while these two companies compete in VR hardware and software, their focus couldn’t be any more different.

Oculus VR Logo (via Wikipedia)

Oculus is coming at virtual reality hardware from both sides: low-cost mass-market [to drive users] and high-end [to drive technology]. Only recently (with the reappearance of Valve) have people begun to question the second leg of that approach.

In the short to medium term, Oculus simply wants to develop the technology and to get enough people on-board. In the medium to long term, on behalf of Facebook, they want to explore other opportunities and to create an avenue for Metaverse based services over the Internet. To put it more amusingly: Facebook is looking to be the next Facebook before their core business starts to atrophy.

Valve Logo

Valve is currently coming at it from the angle of PC gaming. (It is unclear where else, if anywhere, that their partner HTC may be wanting to go with this, but I suspect that they may have their own ambitions.) Valve/HTC is claming the high-end of the feature space, which goes hand-in-hand with the well-known “Glorious PC Gaming Master Race” schtick started by Zero Punctuation.

Really, they’re probably more looking just to be competitive… and to differentiate themselves. Did you see their announcement of a price premium? That helps support your opinion of Valve providing a superior solution, which works to Valve’s benefit almost as much as increasing the number of users. Judging by the reactions of VR enthusiasts, it was well received.

Valve’s mission of pushing PC gaming forward is something that protects and grows their Steam software distribution platform — they do not want to be marginalized by a single competitor which controls the market. That means that they need hardware. But that also drives their focus into the SteamVR/OpenVR middleware to support third party VR products. To date, they have not communicated any mention of ambitions in mobile VR or the Metaverse, but they’re not excluding it, either. To put it more amusingly: Steam is looking to be the next Steam.

Looking a little further out, I think that there is only so far that Valve can climb the product and technology tree before Oculus catches them and even surpasses them. The high profile recruitment and acquisitions of Oculus speak to this. Yet at some point, it may not matter to Valve, so long as they can entrench themselves as a platform for VR software distribution (and services).

Today, we have two companies that are looking to protect their legacy and they’re using virtual reality to project their existing business models into the future. Looking at the one space where they collide, which is PC gaming, in the short term there will be cooperation and competition.

Subtopic: PC Gaming

Oculus: The head start that Oculus has earned with their SDK means that there are going to be Oculus-only titles. There may also be publisher spill-over benefits with easier software ports into mass-market mobile VR. It is also good to be the owner of a PC-based Oculus solution because Valve will want to support your hardware in SteamVR. Why? Because they want to sell you games. Oculus may have started its focus on games, but long-term, it is unlikely to be the bread-and-butter for the company. Still, Oculus is going to have to try hard if they want to lose PC gaming.

Valve: Currently favored to steal the first-mover advantage in PC gaming, but that remains to be seen. They’ve introduced novel technology (Lighthouse tracking and room-scale VR) which means that they’ll have exclusive features which initially will only available through their hardware, but will be free for other hardware manufacturers to integrate. (We’ll have to see how well publishers target those unique features.) They have an enviable existing marketplace which will be tough to topple.

Ultimately, Valve doesn’t have to win the PC market as a whole, or even the high-end. They only need to offer and support choices (or, what some might spin it as “cause fragmentation”) with their own hardware and by supporting other VR hardware vendors. They need to prevent one company from monopolizing the space and cutting them out of software sales.

Summary

Are both companies on the right path? It would seem so. They’re just working towards different goals. Ultimately, we’re just caught in the middle, and you know what? I like it.

UPDATE: March 22nd, 2015 — I don’t know about Oculus, but I can confidently say that I’ve underestimated the scope of Valve’s efforts in Virtual Reality. I’ve spent the past two days pouring over public resources regarding their hardware. With the assistance of other users on Reddit, I believe that I’ve reversed-engineered some of their announced technology, and gained a solid insight into other pieces which have yet to be announced. I hope to share more about this with you soon.

UPDATE: March 20th, 2015 — Underscore_Talagan correctly pointed out that Valve is making their Lighthouse system free to integrate by third-party hardware manufacturers. This has now been noted and cited in the text above.

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One response to “Competitors with Different Goals: Valve versus Oculus”

  1. jasonostberg says :

    Great analysis, keep it coming! The war is just getting started.

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