Oculus VR, the Kickstarter-funded technology startup now owned by Facebook, has already had a tough 2017— and it’s only February.
After appealing the lawsuit, on Feb. 1, Oculus lost a heated copyright case against ZeniMax in a Dallas, Texas court, with damages of $500 million being awarded to ZeniMax. $300 million of the damages were assigned directly to Oculus itself, with co-founder Palmer Luckey on the hook for another $50 million and former CEO Brendan Iribe assigned $150 million.
However, the company’s struggles run deeper than just one court case.
Facebook announced that out of 500 Oculus Rift demo stations within Best Buy stores, 200 would be closing due to lack of activity. While Oculus spokeswoman Andrea Schuber said that “seasonal changes” caused the activity, an internal memo acquired by Business Insider indicated “store performance” as the cause.
While sales of VR devices are always increasing, relative newcomers to the market are outperforming Oculus’ Rift by large margins in terms of sales. While the Rift and its other major PC-based competitor the HTC Vive have each shifted around 350,000 units in 2016, the PS4 console-based Playstation VR is projected to sell 2,600,000 units.
SuperData, a market research firm, says things may not be all bad. A projected increase in revenue from $2.9 billion in 2016 to $40.3 billion in the year 2020 may help Oculus turn its fortunes around.
Outside of sales, Oculus has had trouble maintaining its public image. Luckey caused numerous issues for the company when, at the end of last year, his financial support for a pro-Trump internet group called Nimble America was made public. Additionally, his relationship with Nicole Edelmann and numerous references to alt-right groups in his Twitter history caused damage to his public image. As a result, Luckey has spent most of this year out of the spotlight as to spare the company any outrage directed at himself.
Regardless, Oculus has pushed through the second month of 2017 and shows no signs of slowing down.
In Facebook’s latest SEC filing, they state that Facebook has “multiple grounds to appeal this result” and will “vigorously pursue” the appeals process in the Zenimax case. Though Facebook incurred losses during the litigation, the company maintains “the result of the verdict… was not material to our financial results.”
Additionally, Facebook CEO Mark Zuckerberg recently shared a series of images from inside the Oculus Research facility showcasing new advanced technology, accompanied by a statement appearing to reaffirm his commitment to the company.
Only eight days after the Zenimax lawsuit, this update from Zuckerberg confirms that VR is here to stay in Facebook’s eyes. While Zuckerberg said that investors need “patience” in a recent investor call, blaming the trial with ZeniMax for the delay, he announced last month a new Head of VR in former Google exec Hugo Barra.
While, in reality, Oculus endured a rough start to 2017, its hopeful eyes are looking toward better months.