Facebook to close Oculus’ virtual reality content studio

A scene from Oculus Story Studio's Emmy-award winning VR movie "Henry." Oculus said Thursday that it would close its cinematic arm, Story Studio.
(Oculus VR)

Oculus VR will close its Emmy-winning cinematic-content division, Story Studio, to focus instead on funding others’ storytelling projects.

The Facebook-owned virtual reality company said in a blog post Thursday that shifting away from producing its own content will free up resources allowing it to explore “exciting but unsolved problems in [augmented reality] and [virtual reality] hardware and software.”

“We’re still absolutely committed to growing the VR film and creative content ecosystem,” Jason Rubin, Oculus’ vice president of content, said in the post.

The company said it committed $250 million last year to fund virtual reality content from various developers and would earmark $50 million of that money to support nongaming, experiential virtual reality content.


Social media giant Facebook Inc. made a major bet on the future of virtual reality in 2014 when it bought the start-up for $400 million in cash and nearly $2 billion in stock. The acquisition helped turn Oculus into one of the biggest names in the nascent industry.

But in the years since, competitors such as PlayStation VR and HTC Vive have surged and Oculus headsets have not sold as well as the company had hoped. Analysts said this could have encouraged Facebook to reposition its resources.

“The work Story Studio was doing was compelling,” said J.P. Gownder, vice president and principal analyst at Forrester. “But it wasn’t making money.”

Recently, Oculus weathered the departure from Facebook of its founder, Palmer Luckey, and a $500-million judgment against Facebook and Oculus founders after a jury found Oculus violated a nondisclosure agreement with a video game company.


The virtual reality market has also matured more slowly than many had initially expected. Analysts now predict mainstream interest in virtual reality is about five to 10 years away. Oculus itself has largely garnered fans among gamers and companies looking for new ways to train employees or do product design.

“We’re still at an early adopter phase, so the market still hasn’t seen a takeoff,” Gownder said.

And unlike other tech giants now dabbling in video, such as Amazon, Facebook hasn’t made a big commitment to creating its own content. That made Story Studio something of an anomaly inside Facebook.

Usually Facebook tries to be a platform for content, rather than the creator, said Aaron Kessler, senior analyst at Raymond James.


In buying Oculus, the Menlo Park social media firm was likely trying to “jump-start” the virtual reality ecosystem, he said.

But now that other studios, some large and some independent, have started to produce high-quality virtual reality films, Facebook will likely look to push boundaries elsewhere in less-developed aspects of the medium.

“It’s no longer necessary to get the proof of concept out there,” said Lewis Ward, director of gaming and augmented and virtual reality at IDC. “The closure of this short film-centric studio probably makes sense in the long run.”

Oculus Story Studio produced three short VR films, including the 2016 Creative Arts Emmy-winning “Henry,” which allows viewers with a VR headset to explore a hug-loving hedgehog’s birthday party.


An Oculus representative said in a statement that while the company could not “get into specifics,” Story Studio employees affected by the move will have the option of applying for new jobs within Facebook. Story Studio had about 50 employees and is based in Menlo Park, Calif.

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