I have been wanting to buy the Oculus Quest for the longest time.

A few years ago, when Oculus first came out with The Oculus Quest, I wanted to buy it but did not get a chance to do so.

This year, Oculus Quest 2 is out and the reviews online are amazing. See CNET review, Toms Guide review, and The Verge review.

So just a few days ago, I found a reliable online seller of Oculus Quest 2 in Singapore and decided to purchase it.

Having tried Oculus product first hand, I have to say that the reviews are correct – Oculus Quest 2 is a remarkable VR product.

Oculus has a winner in their hand with Oculus Quest.

And yes, Oculus is Owned by Facebook

On March 25, 2014, Facebook spent $2 billion to acquire Oculus.

“Acquisition positions Facebook to accelerate Oculus’ growth in gaming, communications, and new social experiences.” – Facebook 

Fast forward six years later, it is safe to say that Oculus VR headsets have not reached the mass audience that Facebook wants yet.

However, they have been getting some decent traction = especially with their first release of Oculus Quest – the first VR headset without having to have cable to operate.

In the past, Oculus Quest users do not have to use Facebook to log in. With Oculus Quest 2, they have to. And of course, I am biased, being a shareholder of Facebook, I do not mind logging in with Facebook.

After all, I have logged in with Facebook for many other apps before too.

My Conclusion is Oculus Will Be Great for Facebook’s Future

Let’s get it out of the way.

Facebook growth will likely be still from its ad business for many years to come.

I am supportive of that because the ad business is such a high margin and durable business – as long as Facebook continues to provide the best in class experience for users to continue to engage with Facebook platforms.

Although some people hate the fact that now Oculus requires them to login using Facebook to use the product, for Facebook, on the other hand, having Oculus as their exposure in VR, is a step in the right direction.

I predict it will still be many years before VR can even go truly mainstream, but the Oculus Quest 2 is a solid contender to bring VR to mainstream because it is priced lower than most other VR headsets in the market now – and it is a great quality product.

Mashable even has an article titled “Oculus Quest 2 review: VR finally goes mainstream.”

Facebook Other Revenues is Growing, Thanks to Oculus Quest 2

Oculus Quest 2 is without a doubt a new source of revenue for Facebook.

It is a big part of Facebook’s non-advertising revenue – which will only likely grow in the future.

In Facebook’s latest Q3 2020 earnings call, Dave Wehner, CFO of Facebook said that Oculus Quest 2 orders have been strong and it should benefit their other revenue.

Facebook is also going all-in on Quest 2 as they have recently discontinued the sales of the Oculus Go and Oculus Rift S headset – because the Quest 2 can also use a USB-C cable to support PC VR games. Which will make the Oculus Go and Rift, in my view, not that useful anymore.

VR and AR Can Go Mainstream

Mark Zuckerberg said that they have a big milestone to get to 10 million active users in their VR systems.

The reason for that is because he said that that is when the ecosystem will be self-sustaining and so that independent developers can prioritize the Oculus platform above alternative VR platforms due to a sufficiently large installed base for them to make good returns.

And in recent times, Facebook has also been going on a game studio acquisition spree – having bought the company that made Beat Sabre as well as recently, Lone Echo.

I have played both Beat Sabre and Lone Echo in Quest 2 and I have to say that it is very easy for me to play with other players online, and it is very fun.

Strong Balance Sheet

As of the end of Q3 2020, Facebook cash and cash equivalents and marketable securities were $55.62 billion.

They currently have a strong balance sheet with zero long-term debt.

This means that Facebook will have the flexibility to continue investing in Oculus – for Oculus to continue making great VR products – without worrying to run out of money.

So, Oculus being under Facebook is great not only for Facebook for its VR exposure but also for Oculus, to focus on making great VR products without having to worry about money.

Continuous Innovation

Personally, what I like about Facebook is that they have had a good innovation culture going on that does not afraid to try new things.

They do not mind trying.

And they do not mind failing. Case in point: Calibra and the Libra currency that did not gain traction.

They are also always trying to improve on whatever asset they currently have. For example, the next leg of improvement for WhatsApp will be WhatsApp Pay that will allow WhatsApp users to make payment with one another as easy as one sends a message.

This is an article I wrote about Facebook back on 3 November 2018 – yes I have been long on Facebook since 2018.

In Conclusion

As of Facebook’s latest Q3 2020 report, its advertising business increased 22% year on year.

What’s important is also the fact that their family daily active people has also increased 15% year over year while family monthly active people increased 14% year on year.

This means that people are using Facebook’s platforms on a regular basis and the engagement continues to be high.

With this high amount of engagement, they can do many things – which includes payments (as we talked about above) and e-commerce – 2 things they are working on at the moment to potentially expand their other revenue sources even more in the future.

Image source: Bloomberg

And another avenue that they can translate their success to in the future is in VR – and from what I see so far, Facebook definitely has made the right decision in buying Oculus.

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