The Rollercoaster Rift of Oculus: Part Two: The Rise of Oculus and the Fall of Palmer Luckey

Oculus and its Kickstarter funded flagship, the Rift, had a whirlwind development, with the Rift becoming the heralded saviour of Virtual Reality, flanked by the biggest brains in video game and 3D graphics technology. Oculus cultivated an infectious enthusiasm, a dream of high quality yet affordable VR and a bright future of ever increasing ambitions in a growing, increasingly devoted group of followers.

And one of the biggest companies in the world wanted in.


In late March 2014, social media giant Facebook announced its purchase of Oculus for $2 billion (although including employee agreements and potential milestone payments the sale was worth closer to $3 Billion). To say this was a huge acquisition was an understatement. Facebook was at that point nigh-ubiquitous as a social media platform and Mark Zuckerberg was one of the richest people on the planet. This was the kind of backing that aimed to turn what was primarily a video game peripheral (its ground breaking technologies were aimed solely at the games market at this point) into the future of communication as we know it. In a massive post outlining Facebook’s ambitions for Oculus, Zuckerberg stated:

“After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home.”

The response to this purchase was mixed, to say the least, and not just from the core supporter base at Oculus. The stock market, concerned that the virtual reality market at that point was mostly known to suddenly collapse, caused Facebook’s share price to drop, although with Facebook being Facebook it would very quickly recover.

The response from backers and other supporters was a mix of cautious optimism and outright hostility. There were accusations of betrayal of the core supporters, since they had paid large sums of money to offer support that ultimately was needless. Others were worried about their existing pledges and whether they would receive the product they had put money towards, since Facebook lacked the goodwill that the startup Oculus received. Many others still pointed to Facebook’s questionable privacy and data management policies, fearing the effects of using a machine that knows what they see and the potential for more intrusion for the purpose of marketing and selling advertising.

Many of these fears would be unfounded and indeed Oculus would for the most part run as it had done for the previous two years. The irony about the advertising fears is that in 2017 it was Oculus’ main rival HTC that introduced VR advertising as a way to pitch its VivePort applications platform.

Regardless of the specifics involving this deal, the fact that one of the biggest companies in the world wanted VR was telling, and it wouldn’t be long before many other companies would begin to circle.


Oculus’ Kickstarter may have started interest in VR again but their purchase by Facebook in hindsight made VR the next big thing in technology and it would be a matter of time before a number of major tech companies would start to get involved.

The first, as alluded to previously, was Sony. The Japanese technology firm, having made inroads with its Glasstron line of head mounted displays started work on a VR headset in 2011, with the Playstation Move motion controller designed initially to function as VR controllers. Project Morpheus was long rumoured before it’s unveiling in 2014 and was finally released as Playstation VR in 2016.

Then there was Google. During David Coz and Damien Henry’s “Innovation Time Off” project work, they managed to create a very low cost VR platform. Google Cardboard was essentially a pair of lenses in a cardboard box, which used a compatible smart phone’s gyroscope, screen and processor to create a self-contained VR experience. However its low cost and compatibility with Android meant that Google started to widely distribute Cardboard as early as late June 2014. Google would take their Mobile VR ambitions a step further with the more sophisticated Daydream platform in 2016, a platform which announced a standalone VR headset in May 2017.

Samsung, the biggest phone company outside of Apple, benefited from Cardboard support but ultimately would partner with Oculus directly to create a HMD, the realisation of a vision that went as far back as a patent on using a mobile phone for VR that Samsung acquired in 2005. In partnership with Oculus, the Gear VR series had a touchpad and button attached to the device and due to limiting the devices with which it was compatible to only higher end Samsung phones, the Gear VR could allow for fairly advanced experiences, although an actual controller took ages to arrive.

Finally, there was HTC. Video game developers Valve, owners of the popular Steam online marketplace were creating an open platform for virtual reality akin to the popular Steamworks API for games and their troubled Steam Machine concept for ready-made simple to use gaming computers. SteamVR the concept was on its way, but it needed a model system to showcase its technologies and pave the way for an open VR market. Enter struggling Taiwanese mobile phone company HTC, who created a prototype which ultimately saw release in 2016 as the HTC Vive, featuring rather impressive room scale motion tracking via their Lighthouse positional trackers, as well as coming with motion controllers and wide support for software through SteamVR.

In a year, Oculus had gone from the only game in town to facing what would become rather fierce competition.


The final year or two of development would also not be free from controversy, with a lot of the issues caused by the reality of the VR dream affecting some early promises. The Facebook purchase had put Oculus and the Rift in a weird place. Were the nearly 10000 backers purchasing a product when they pledged on Kickstarter,  were they giving in an act of charity (undercut by 2 billion dollars of Facebook money) or were they making an investment in which they would recieve no dividends? Ultimately the question was never answered, but the problem it caused was solved by offering anyone who pledged $275 or higher (for a DK1) a consumer handset and two games for free.

By 2014 the bright optimism that surrounded Kickstarter had significantly fallen as the reality of the rigours of development set in. Several major projects were notably cancelled, others went through minor and major controversies at this point, and the grey area of what pledging on Kickstarter actually meant led to worries Oculus would fall down the same path despite its substantial Facebook funding.

Another controversy came with the sheer scale creep of the project. As the Rift incorporated a 1080p screen, as well as a boost in new technologies thanks to the influence of Carmack, Iribe and Facebook’s additional funding, the system requirements increased as well. The original plan was for Virtual Reality that would be within reach of everyone, however when the system specifications dropped, jaws dropped as well.

The minimum specs included a NVIDIA GTX 970 graphics card, an Intel Core i5 processor and 8 gigabytes of RAM, which at the time the specs were released in May 2015 meant a computer close to $1000 as an absolute basic machine. While some software updates have since reduced those requirements to the more accessible to new builders Intel i3 and GTX 960, it did shock some users who had expected through the Oculus’ development that the minimum requirements would be more accessible. This would have been one thing until the initial cost came in; £549 would get you the Rift, one Constellation motion tracker, an Xbox One controller and a free game, Lucky’s Tale. Needless to say this was a bit distant from Luckey’s original claims of a $300 headset and was a cause of particular upset, especially from Kickstarter backers who (thankfully wrongly in this case) thought they would not receive a customer unit for this reason.

Luckey originally envisioned Oculus as an open platform, something shown in how Oculus released the schematics and source code of the DK1 in full in September 2014. By 2015, the platform was decidedly more closed, with a DRM-protected storefront only allowing games that your computer met the recommended specs for to be played. Given that the initial plan was for Oculus to be the centre of an open VR ecosystem, aimed to avoid the mistakes of the past, this seemed to be something of a misstep, a point proven when Valve’s (relatively) more open platform for development, SteamVR, would prove to be more popular with developers. Ultimately both Valve and Oculus are part of the Khronos group’s “OpenXR” initiative aimed to stop over fragmentation of the Virtual Really Market. It should also be noted that as much as Valve has a slightly more open platform designed for the HTC Vive, much like with VR advertising, HTC has its own closed platform called VivePort.

The Final Release

Ultimately, finally, the Oculus Rift would be released on March 28 2016, at a cost of $599 (£549), although many people would face delays. Palmer Luckey personally delivered the first Rift unit to be preordered, and Kickstarter backers were prioritised when they received their free Kickstarter Edition Rift. Preorder buzz was huge, and the day one pre-orders were such that new orders of the Rift would not reach consumers until July 2016, and in the scramble to get enough units ready, motion control units would be a $200 optional extra released several months later. Both of these did not help Oculus as its main rival, the HTC Vive, released a week later at the more expensive $800 but with motion sensing and room scale motion track out of the box and had a virtual monopoly on PC VR hardware sales as a result.

So what did you get for your $600? You got the headset, a Constellation motion sensor, a control remote, a Xbox One controller, the veritable squid of wires that connects everything together, and a copy of 3D platformer Lucky’s Tale.

The headset was vastly removed from even the DK2. The final design would ultimately use two bespoke OLED panels, each with a resolution of 1080×1200 at a refresh rate of 90hz, so each screen was better than the complete DK2 display. The aim of the display was to remove persistence, so the use of fast, global refresh rates, low latency and 2 millisecond persistence does help to reduce although not exactly eradicate motion sickness. Interestingly, the Rift has built in headphones, with 3D audio support, something that is not included with either the Vive or PSVR, although HTC created the “Deluxe Audio Strap” which allows a similar experience as an optional extra.

Motion tracking came through a series of Infra-Red trackers, known as Constellation. One can provide 6 degrees of freedom movement for the headset, however the trick is in combination, a number of constellation modules can provide room scale VR, something that is taken advantage of with the later release of the Oculus Touch motion controllers in October 2016. It didn’t escape people’s notice that Room Scale VR and Motion Controls were an optional extra with Oculus whilst the HTC Vive provided both VR wands and the more elegant (as well as open) Lighthouse motion tracker.

As for the extras, a deal with Microsoft brought their excellent Xbox One controller into the bundle in an OEM deal that cost Oculus pennies per unit to put in. What is interesting however is the choice of game. The Vive’s free pack-in game was The Lab, a series of little VR experiences which allowed a mix of fun tests of both the Vive’s VR capabilities and motion controllers. Oculus gave people Lucky’s Tale, a somewhat mediocre 3D platformer that didn’t do anything massively wrong, but also wasn’t a game that really benefited from VR. Your head was the camera and you could see slightly further, but really it wasn’t anything that couldn’t be done with the right analogue stick. It would take several months and the release of the Oculus Touch before the Rift started seeing games that took full advantage of VR, with Superhot VR and the critically acclaimed Robo Recall leading the vanguard.

How did Oculus ultimately fare commercially? According to SuperData Research, initial sales through 2016 show that Oculus was a rather distant third place with 335,000 units sold, against the near-million selling PSVR, as well as the HTC Vive which sold nearly 100,000 units more. It wasn’t exactly a disaster, but they were fairly bad figures. It was not one big thing that sapped sales, but likely a lot of small issues, controversies, eroding of consumer trust and being a relatively small fish in a vastly expanding pond (in spite of Facebook’s funding), as well as being the early innovator, that historically (and especially in VR) had a tendency to be swallowed up.

Further Controversy and Withdrawal from the Public Eye

Then there was Luckey himself, who ended up embroiled in a political scandal. Luckey, a young rich self-described libertarian, was found in 2016 to have donated $10,000 to political group Nimble America, a non-profit organisation that supported controversial Real Estate magnate Donald Trump’s presidential campaign. Their activities include, among other things, hanging a giant banner of Presidential Campaign opponent Hillary Clinton with the title “Too Big to Jail”. Luckey apparently posted on a pro-Trump website and when this and his donation was discovered it caused a lot of controversy, with the assumption being that Luckey had paid for some of the more questionable activities and supported Trump’s own controversial views, both claims he strongly denied. A later donation of $100,000 to Trump’s inauguration fund was revealed to have been made through a shell company traced to Luckey, adding further controversy.

In any case, it caused a huge amount of controversy and several companies announced they were pulling support for Oculus Rift on the basis of Luckey’s comments. Polytron (Makers of cult hit Fez) dropped support, as did Tomorrow Today Labs and Scruta Labs, although both of the latter companies restored support as the company was further integrated into Facebook. Other companies, most notably Insomniac Games, condemned Luckey’s comments and actions but stopped short of a boycott.

This was a fierce combination of blows to Oculus that put the Oculus project at risk. The first is the company being condemned right in the early launch period of Virtual Reality, which hurt their image and the branding of Oculus right at the point where the power-user market of VR was about to be carved up. Oculus was caught in between the HTC Vive, the first VR headset of a proposed open platform by Valve which cost more but was far more supported and open a platform, and by contrast PSVR offered a less powerful but still strong VR experience with an overall cost cheaper than just the Rift and Touch controllers, let alone the powerful rig you need to run it. Oculus to compete needed all the goodwill it could get, and Luckey’s actions would ultimately do a lot of damage in the short term to the Rift’s sales.

Luckey’s reputation was utterly devastated in the aftermath. The former tinkering wunderkind turned poster boy of VR, known for an easy going reputation and radiating passion for gaming and VR had unwittingly revealed a cynical dark side that it would be difficult to forget about or rationalise with the optimistic futurist seen in interviews and the Kickstarter pitch. While he did a mix of apologising and denying he posted what he did, it did not do a whole lot of good. Soon after the revelation in September 2016 he disappeared from Social Media, leaving Oculus, and indeed VR as a whole, without its most prominent public figure.

Although, as would come to be revealed, bad PR may not have been the only reason for Palmer’s seclusion.


In March 2014, Facebook bought Oculus VR, and within two months ZeniMax media, parent company of Bethesda and iD Software sued Oculus (and by extension Facebook) for over $4 billion. The legal complaint was based on various grounds, the biggest being alleged theft of company trade secrets. It was an acrimonious, ugly and rather lengthy lawsuit, finally ending in February after two and a half years of legal battling.

Most of the case was based on the relationship between Carmack and Luckey, what code was used and whether it is protected by copyright (a thorny legal issue which this case will likely form a legal precedent for), whether Luckey broke Non-Disclosure Agreements and whether Oculus lied about the origin of the Rift.

ZeniMax through their lawyers made some particularly strong arguments, the most shocking being the allegation that Palmer Luckey, the 19 year old who single handedly revived VR, was a fiction invented by Oculus, and that he only created the rift using code stolen from ZeniMax. Carmack allegedly stole thousands of work emails, some of which containing copyrighted ZeniMax code (believed to be the source code for RAGE, Carmack’s last original game at iD Software). There were also the thorny attempts between ZeniMax and Oculus to have a working deal, and when that fell through, so did the “Oculus Ready” version of Doom 3 BFG. The allegations therefore were that software and hardware were stolen by Oculus, their trade secrets were misused and the entire vision of the company was a con trick.

Oculus and Facebook counterargued that the argument lacked merit and was brought about by jealousy towards the smaller company that had made good and brought Virtual Reality back, and that the arguments had no merit. Oculus had not stolen any trade secrets, and Zuckerberg and Palmer Luckey both took to the stand for the defence over the trial’s duration.

Ultimately, both ZeniMax and Oculus were half right. Oculus had not stolen trade secrets, by far the biggest of the charges. However, Oculus, Luckey, Iribe and Carmack were liable for Breach of Contract, Copyright infringement, trademark infringement and false designation. Essentially whilst they didn’t steal ZeniMax’s trade secrets, they did knowingly use copyrighted code without permission and used ZeniMax’s trademarks without permission. Ultimately this would come at a cost of $500 million in damages.

From a monetary standpoint, this is only an eighth of what ZeniMax requested in damages and as of the time of writing are seeking an injunction to stop the sale of Oculus Rift and Gear VR headsets, which would ironically enough be far more damaging than monetary costs. Oculus have responded by vowing to appeal the decision, so for the time being, this legal war is far from over, particularly since Zenimax is poised to begin legal proceedings against Samsung.


The lawsuit and indeed Palmer’s personal controversies could not have come at a worse time. Virtual Reality has only just arrived and as a result was essentially open season, which is why there are so many competing lines and standards vying for success. Oculus has been damaged as a brand both through political scandal and allegations about Luckey himself. He disappeared from the public eye altogether, right at the time Virtual Reality needed a major public figure to sell the concept to a naturally wary customer base, although given everything that has happened it may not be much of a surprise.

Ultimately, Luckey would stick around in the shadows, last resurfacing to testify in the ZeniMax lawsuit. After the costly conclusion to that, on March 30 2017, Luckey left Oculus VR and Facebook. Oculus reshuffled in the latter half of 2016, with Luckey moved to an unspecified role in the company and many of the major figures either demoted or otherwise shuffled around, the most major of which being Brendan Iribe, former CEO of Oculus VR. Oculus released a statement noting that Luckey would be missed, although did not note whether he had left the company on his own volition or simply jumped before he was pushed.


Any true examination of Oculus’ and Luckey’s legacy in Virtual Reality is going to be premature at this point. Oculus is still a huge company with major advances in the pipeline, and Luckey, being only 24 with a huge personal fortune, will doubtless be involved in the industry he helped bring back and has had a lifelong adoration and interest in for years to come. We can however take a look at how much has been achieved and speculate on what will be next.

Starting with Luckey, he provided in the early years of Oculus a passion, verve and interesting perspective. The original plan for the Rift was essentially designed with himself as the target audience, and provide VR with a face that up until then it had never had. Johnathan Waldern of Virtuality was a charismatic figure but barely known outside of VR enthusiasts, while Luckey, clearly boosted by the image of a basement tinkerer who became a multi-millionaire, was one of the few figures that is known outside of Virtual Reality circles, identifiable in the same way a Peter Molyneux was in computer games, and a Clive Sinclair was in home computers. Without that, Virtual Reality is once again lacking a clear identifiable figure, although Mark Zuckerberg is certainly trying to make himself that, with increasing appearances at Oculus events and announcements of new Oculus technology.

That said, with VR expanding at such an exponential rate, perhaps there isn’t a need for a singular face of the industry. Virtual Reality’s path to success goes far beyond hobbyists and tinkerers, beyond individual developers, engineers and designers. Virtual Reality will grow at a pace and rate such that no one company and no one person can be associated with the whole industry. That Virtual Reality has done so in only four years is promising for the medium’s progression from hobbyist dream to ubiquity amongst the masses.

There is time for Luckey to increase his impact in the industry. He is only 24, and in the technology industry, few things can’t be forgiven with enough time. Luckey, however much you agree or disagree with what he did in his last controversial year at Oculus, he is already an important figure, someone who deserves his own chapter in the history of Virtual Reality, and as soon as he’s finished taking a break and cosplaying as Metal Gear Solid characters, that enterprising spirit will return. An interview with MoguraVR, a Japanese virtual reality website still shows that flashing brilliance and adoration of VR as a harbinger of a sci-fi future, so I think we will be hearing a lot more of Palmer Luckey yet, although given his huge fortune he may never have to work again.

Like many articles looking at the history of a man, a company and indeed a resurging industry so young, the story will inevitably be incomplete, however the Rollercoaster Ride of Rift will continue if and when new information comes to light.


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