Facebook, Sony Lead New Generation of Virtual Gaming

Virtual reality, augmented reality, and holograms are the stuff of sci-fi legends and gamers have been waiting decades to get their hands on it. Now that technology is virtually right around the corner.

Facebook (NASDAQ:FB) says its Oculus is "going to be the best VR experience in the world when it launches", according to comments from Wednesday's earnings call. However, Sony’s (NYSE:SNE) PlayStation unit is also rolling out some unique headset games around the same time, early next year. Although early adopters are likely to jump in, its too soon to tell whether the products will go mainstream.

“It’s chicken and the egg. There won’t be a lot of great gaming applications unless there’s a lot of headsets out there, but no one will buy headsets unless there’s applications. And if they cost 15 hundred bucks, no one will take them.” said Wedbush Securities analyst Michael Pachter.

For now, companies are willing to roll the dice. 27 companies had new demonstrations at the E3 video game expo last month. Rich Taylor, senior vice president of the Entertainment Software Association, which stages E3, says that’s a “significant uptick” from last year when he put the number at fewer than five firms.

Although companies are keeping costs and prices close to the vest, Pachter thinks the deep pockets of Oculus owner Facebook make it “formidable because they’ll subsidize it.”

Oculus co-founder/CEO Brendan Iribe confirmed that is the plan in an interview with FOXBusiness.com. Iribe says Facebook CEO Mark Zuckerberg’s commitment to growing VR helped drive the decision to accept the social network’s $2 billion buyout offer last year. “Mark’s a gaming nerd just like us,” jokes Iribe, adding, “He is focused on growth over profit for the first few generations of VR. We want to get as many users in as possible for the lowest price point possible.”

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Oculus is helping bankroll developers to ensure there’s proprietary content from its in-house Oculus Studios and a $10 million indie developer fund it has set up. The investments are starting to pay dividends when comparing demos from this year versus last year’s E3. As for Sony’s Project Morpheus it took a big step forward visually and functionally from last year’s demo, as you grab items, adjust the radio in a virtual car, reload weapons and look around your environment. Shawn Layden, Sony Computer Entertainment America CEO says there will be plenty of games when Morpheus launches “early next year.” Layden says at first there may be just a Morpheus mode or level, but as more headsets sell there will be more dedicated VR titles. That will be followed by more film, video, and sports content. Layden ventures that VR games will not have “50 hours of gameplay, I think the VR experience really befits a more concentrated and concise gaming experience.” And for that reason, Morpheus VR games may not cost more than PS 4 console games. Disney (NYSE:DIS) is also keeping tabs on the trend. John Blackburn, senior vice president with game publisher Disney Interactive tells FOXBusiness.com, “I’m interested to see how (Sony’s) Morpheus works with kids. We’re looking at it, trying to figure out where we go. I love the idea of being in the (Infinity) game.” Hollywood may also want to play. “The biggest interest is from Hollywood. They want to use virtual reality to advertise movies,” said  Richard Marks, director of Sony’s PlayStation Magic Lab.