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Oculus’s Story Studio Unit Turns the Page

Oculus, the Facebook-owned VR company, could use a bit of good news after a recent bad stretch that included the controversial departure of co-founder Palmer Luckey and a loss in the courts.

That good news didn’t come this week, when Oculus head of content Jason Rubin announced Thursday in a blog post that the company is shutting down Story Studio, the unit that created shorts such as Lost, Henry and Dear Angelica, reasoning that it makes more sense to help fuel third-party development that has already helped its high-end Rift product as well as Gear VR, the mobile VR platform that works with certain Samsung smartphones.

Variety reported that Story Studio's 50 staffers are being encouraged to seek other jobs at Oculus, and that all ongoing projects at the studio are being cancelled. 

But, on the positive side, Rubin noted that Oculus is “still absolutely committed to growing the VR film and creative content ecosystem,” adding that Oculus last year committed an additional $250 million to fund VR content from developers around the globe, helping to spawn games such as Robo Recall, Rock Band VR and Follow My Lead.

RELATED: Oculus Splits Into Groups Focused on PC, Mobile VR

Additionally, Oculus will “carve out” $50 million from that total to fund non-gaming, experiential content.

“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,” Rubin explained. “After careful consideration, we’ve decided to shift our focus away from internal content creation to support more external production.”

While the shutdown of Oculus Stories Studio isn’t super news for Oculus, “declaring the demise of VR” because of it “is both alarmist and somewhat premature,” Mike Bloxham, SVP of Frank N. Magid Associates, said in a statement regarding the decision.

 “The bottom line is that although the news about Oculus Story Studio is not good, I certainly don't see it as terminal as long as the Samsung Gear VR, Playstation's, Google's Daydream and the rest continue to sell and more content populates the broader ecosystem. That's where the bulk of the market is right now and likely will be for some time,” Bloxham wrote.

Based on a recent study of 2,000 U.S. consumers, the VR/AR Insights Consortium (a group formed by Magid and counts members such as A+E Networks, Best Buy and Turner) estimated that there are 44 million consumers who are “in-market” for virtual reality, meaning they are planning to buy a VR device in the near future. The study also found that 82% of VR devices already in use have been purchased in the past six months.

Greenlight Insights, in partnership with Road to VR, predicts “modest” growth for the virtual-reality sector in the short term, hitting $7.2 billion in global revenues this year, of which $4.7 billion, or 65.4%, will be tied to head-mounted displays. That compares to 11.9% for VR consumer content, and 11.6% for VR cameras.

RELATED: VR Market Still Set for ‘Modest’ Growth in 2017 (subscription required)