Facebook loves virtual reality so much it just axed its VR film studio

Proving yet again that goggled nausea is a hard sell, Facebook's virtual reality arm Oculus on Thursday said it would shut down Story Studio, its VR production unit.

"We're now entering the next chapter of VR development, where new creators enter the market in anticipation of adoption and growth, and we've been looking at the best way to allocate our resources to create an impact on the ecosystem," said Jason Rubin, VP of content, in a blog post announcing the closure.

"After careful consideration, we've decided to shift our focus away from internal content creation to support more external production."

The next chapter in this woeful tale doesn't promise adoption and growth. The best it can do is to tease investors with the "anticipation" of a healthy market and to seed product demand with a $50 million commitment to help other companies develop "non-gaming, experiential VR content."

Not content to let Oculus explore the one proven consumer application for VR – high-end gaming – Facebook CEO Mark Zuckerberg remains convinced that isolating people behind high-tech blindfolds can be an appealing social experience.

At the social network's F8 developer conference, he announced the launch of his company's first social virtual reality product, Facebook Spaces. Rachel Franklin, head of social VR, took a turn on stage trying to sell the conceit that VR can be social.

"VR is is technology that gives us something that no other technology has before, a magical feeling of presence," she said, omitting the magical unpleasantries associated with VR, "the sense that we're really there together, even when we're apart. Because of this, VR is a naturally social platform."

Never mind that there's nothing natural or social about the solitary confinement of an Oculus eye prison, the fact is that people aren't buying it. VR hardware and software sales have been underwhelming, with the possible exception of Sony's PlayStation VR.

Oculus' decision in March to drop the price of its Rift headset and Touch controller bundle from $798 to $598 is not the sort of thing a company does when its products are flying off the shelves.

In its unhappy ending, Story Studio couldn't even manage to be original. In January, Envelop VR, the Bellevue, Washington-based VR startup, shut down. In November, Vrideo, a would-be VR video hub, closed. And in February, Facebook shut down some 200 of its 500 Oculus VR pop-up kiosks in Best Buy stores.

That same month, research consultancy CSS Insight tried to put a positive spin on VR sales by insisting that the future looks bright. Given that its paying clients have a vested interest in such things, that's probably a wise move.

But the consultancy also admitted that it had vastly overestimated 2016 VR sales when it revised its figures from an expected 2 million units down to 1.2 million.

"There's no doubt that dedicated VR headsets can be a tough sell," remarked Ben Wood, chief of research at CCS Insight, at the time, citing the cost of hardware and the need to improve "all aspects of the experience," even as he softened the blow by celebrating the technology's potential.

But it was evident at F8 that Facebook now expects that potential will be realized in augmented reality, which can be done using smartphone cameras, without exiling people from actual reality. ®