Interview with Oculus' Jason Rubin - Part 1: The Unpublisher

I sat down with Jason Rubin, VP of Content at Oculus, on the Sunday before GDC 2017 to chat about the challenges the company faces in bringing virtual reality to the mainstream. Today's segment of the interview focuses on the relationship Oculus has with its third party developers and how the company views its role in bringing VR to the masses.

What are you showing here today at Gameday?

We’re showing 12 titles. Some of which are updates, most of which are new. Four of them are Gear VR, eight of them are for Rift. It’s a sampling of we’re bringing out next year. It’s a lot of really quality deep titles. It’s important that you understand that this isn’t all we are bringing out. Games like Wilson’s Heart, which stole a lot of people’s hearts last year at E3, is still on schedule and still coming out. We’re not showing it here today for various reasons, but we have a lot of software coming out. So today is really just kind of talking about some of the titles coming out and showing how how much we have for a new user to play on either one of the devices.

I noticed that Lone Echo wasn’t here either.

Lone Echo is still on schedule and still is going to be fantastic. We didn’t want to focus on it today for various reasons, but it’s going to come out. It’s going to be shown and it’s awesome. So again, we have a lot more than we are showing here. This is kind of a sampling of what we have going on. Nothing that we have announced has been delayed and/or cancelled, so you can assume that it is all coming out.

One of the big announcements that Mark Zuckerberg made at Oculus Connect 3 last year was that Oculus is increasing your funding for financing titles. Can you say how many deals you have made since that announcement? What does your pipeline look like going forward?

We announced that we had spent $250 million to date and that we were going to spend $250 million more at least. So that is not a final number, that is just what we are going to spend. That is a lot of titles! I actually, off the top of my head, honestly can’t give you an answer to how many we have in flight right now. It’s a lot we have a lot coming in. Also, equally importantly, some of these titles are fully organic. We didn’t fund them at all. For example, Killing Floor, we’ve helped them but that is mostly their funding. Blade and Soul is an NCSoft title, they’re as a publisher fully capable of funding their titles and bring them to the platform. So that is a perfect example of content beyond what we fund that’s coming out.

Is there still profit-sharing when it comes to these titles where you are funding and a distributor of the content? Are you paying these studios to create content for Oculus and then in turn Oculus gets the lion’s share of the profit?

No. Not at all. The developers who have chosen to work with us as fully-funded titles have dollar one royalties. That’s our standard deal. So they are doing quite well. Even if they only sell a few copies, they make money from the beginning. I’ve been a developer for 30 years. I think if you talk to the developers, and that’s really what you should do, they will tell you that this is one of the most generous deals they’ve ever heard of in the video games industry. Some other things that we have announced publicly.

We don’t own IP. Dead and Buried we own because it was done with an internal studio, but all of the other titles that you see here are owned by the developer or somebody else. For example, Mage’s Tale is a derivative of Bard’s Tale which is a title that is 30 some years old. We don’t own Mage’s Tale, we’re not asking to own it, they have a lot of freedom with what they do with it. Everybody here owns their IP, which also is extremely generous, and it’s good for the industry because if we help them fund a title and it creates something that resonates with the consumer. They own the IP and have choices with what they do next. The next title they may say “great, they funded our R&D, we have a winner here, let’s bring out a sequel, or some different game that uses the same technology, and let’s bring it out for everybody.”

So this is kickstarting the entire industry, not only Oculus. Let me just close by saying, there are titles that sit in stores outside the Oculus store, not in the Oculus store, that have Oculus funding in them. We have been so aggressive with our funding that there are times where we have had developers, but for various reasons we’ve said, “you know what? You have our money, go put that out on the market, it’s not appropriate for our store.” Either it didn’t meet our quality level for the store or for some other reason, and so there are titles in other stores that we have funded that are good for the industry, some people like it, that just didn’t quite meet the bar for our curated store.

So are you a publisher in these deals you are forming? Can you quantify exactly what Oculus’ role is?

I understand your challenge. Here’s what I would say. We’re very much an un-publisher in a lot of ways. Publishers generally look to own the IP. Publishers generally tend to have long-term sequel rights and things like that. Publishers would tend to put it out under their name and become the marketing leads or the community leads.

We’re very the opposite of that. When these titles go into the Oculus store, they are brought out by the developer themselves. If somebody has issues, they go to the developer for support. If the developer wants to have a community, they have their own community manager that runs it. It’s very un-publisher-like. What we are is a source of funding, a source of information, and an ability to get games that are larger than what would otherwise may be made into the ecosystem at this time. We do not look to be a publisher. We do not want to compete with an Electronic Arts or Activision in the long term. That is not our goal.

I think if VR and when VR is massive and self-sustaining, there’s nothing that would make Oculus happier than stepping out of this and letting the industry do what it needs to do, but we understand that the fastest way to get VR to the masses is by taking leaps forward in the quality of content. Which brings users. Which allows us to spend more on content or developers to spend more on content which brings more users. I watched that happen over decades for the PC. We don’t want this to take decades, so somebody has to put in resources to get it to grow more quickly. You’ll see Google do the same for their platform. Sony is doing the same for their platform. We’re the single largest, most aggressive backer of content in the VR business period. It’s the right thing to do.

I appreciate the clarification on that relationship because it is frequently misunderstood, because you guys are fronting a lot of the money right now. We are in this weird phase for VR where there may not be a ton of HMDs on the market, but it is a chicken and the egg thing. The HMD has to be great but at the same time you need great software.

People don’t buy HMDs to stare at nothing. They’re buying it to use content and unlike a big screen TV where there’s decades worth of content that immediately flows onto it, we have to create that content and it’s so different from past content. Nobody’s ever done anything with positionally tracked HMDs or hand controllers. Someone has to seed the market and we’ve done that, but really we act very much unlike a publisher.

I can give you a perfect example of exactly how unpublisher we are. A couple of times this year, developers have said, “we would like to use the following name for our title,” and they ask us if we want it. Well we let them know that it’s not our decision. This is your IP. You are going to own this, and you have to be comfortable with this. At the end of the day, this is yours, this is not ours, and that’s a very different situation than publishers. Publishers would micromanage that business of picking the name. We’re very hands-off. It is their software.

Continue reading in Part 2 of our interview with Jason Rubin.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.