Oculus shows off virtual reality gear that lets gamers 'inside the game'

Jessica Guynn | USA TODAY

Show Caption Hide Caption Facebook's big bet on virtual reality David Kirkpatrick, a contributing editor for Bloomberg, discusses Facebook's big bet on virtual reality with Bloomberg's Scarlet Fu on "Bloomberg Markets."

SAN FRANCISCO — Oculus Rift is about to get real.

The Facebook-owned subsidiary unveiled a consumer version of the virtual reality headgear at a splashy news conference Thursday, bringing to life what until now has been mostly the stuff of science fiction: The ability to completely immerse yourself in a simulated three-dimensional world.

In addition to Oculus Rift, the company also showed off a prototype of new handheld controllers with a small joystick and buttons that will be available in the first half of 2016.

"This isn't science fiction," Oculus founder Palmer Luckey said. "This is reality and it's happening today."

Gartner Research analyst Brian Blau called Oculus Rift a "great milestone for the immersiveness effort or market."

"For the first time consumers are going to be able to experience VR as it was meant to be," Blau said.

The virtual-reality gear goes on sale in the first quarter of 2016 but Oculus won't say how much it will cost. Oculus Chief Executive Brendan Iribe has said that it will set people back $1,500 "all in" including the computer that powers the Rift experience.

Iribe is banking that gamers will pay that much for "the magic of presence, the feeling of actually being there."

Oculus Rift is a lightweight headset that you put on like a baseball cap to be teleported into a 360-degree audiovisual illusion. An external sensor plugs into the back of a computer. Using an Xbox controller that comes with Rift, you can play games such as fan favorite Halo and new ones such as Edge of Nowhere, which was made for virtual reality.

"For the first time you will be inside the game," Iribe said. "It is finally here. This is the beginning of VR (virtual reality) gaming."

Oculus made the announcement to compete for attention in a crowded field ahead of the Electronic Entertainment Expo, or E3, one of the year's biggest gaming conferences.

Oculus is the most hotly anticipated of the current crop of virtual-reality devices, but it has ever-growing competition. HTC is teaming up with gaming company Valve on Vive and Sony is preparing to release a consumer version of Project Morpheus, which connects to PlayStation 4. And Samsung makes Gear VR, powered by Oculus.

All of the efforts are aimed at millions of consumers who have bought Xbox and PlayStation game consoles — at least initially.

While Facebook may be looking to penetrate the consumer market through gamers, it has much larger ambitions.

Facebook CEO Mark Zuckerberg, who was so impressed with Oculus that he paid $2 billion in cash and stock for the company, envisions virtual reality — and augmented reality — as the next "major computing platform."

Augmented reality overlays virtual images onto your view of the real world. Google was the lead investor in a $542 million funding round in Magic Leap, a company developing an augmented reality headset. And Microsoft is developing HoloLens, a headset that mixes elements of virtual reality with augmented reality.

"We think that virtual and augmented reality are important parts of this upcoming next platform," Zuckerberg said during Facebook's third-quarter earnings call.

Not everyone is sold, at least not yet. Virtual reality in some quarters is being met with the same kind of skepticism as the introduction of the smartphone and the tablet.

Gartner Research's Blau compares this stage of virtual reality to the release of the first iPhone, when many consumers could not yet grasp the usefulness of having a powerful computer in their pockets. But, said Blau, early adopters such as avid gamers, many of whom already have computers powerful enough to run Oculus, will embrace virtual reality.

"Long term I think it has really good potential in the consumer market," Blau said.

Piper Jaffray analyst Gene Munster predicts virtual reality and augmented reality will be "the next mega tech themes through 2030" especially now that virtual-reality hardware makers have figured how to avoid some of the motion sickness and eye strain.

Still, he cautions, mainstream adoption could take a decade.

As technological advances drive down prices, improvements are made to displays and content gets more immersive and engaging, people's "insatiable" appetite for new tech experiences will kick in, Munster said in a research report.

Blau says the key will be "really great content."

"They have to convince consumers that this is worth their time," Blau said. "It's going to come down to: How good is the experience for the individual so you can get them to invest over and over again in new devices and content."

The eventual promise of virtual reality: That in the future you can sit on the 50-yard line at an NFL game, take your kids on a field trip to Gettysburg, watch the Rolling Stones perform live or walk along the Great Wall of China without leaving your home.

If virtual reality begins to fulfill that kind of potential, analysts are predicting a major market opportunity.

By 2025, Piper Jaffray pegs the market for hardware at $62 billion and content at more than $5 billion.

Analysts are interested in Oculus as another potential revenue stream for Facebook.

Zuckerberg has said Oculus will have to reach a "very large scale," some 50 million to 100 million units sold, "before it'll really be a very meaningful thing as a computing platform."

"That'll take a few cycles of the device to get there," he said, but "that's when it starts to be interesting as a business in terms of developing out the ecosystem."