January 2013
LAIRD MALAMED, FORTY-FOUR, OCULUS’S JUST-HIRED CHIEF OPERATING OFFICER, walked into a conference room full of a twentysomething engineers.1 To him, this babyfaced group did not look like a collection of innovators poised to change the world, but rather like a crew of dudes that he might find playing Halo with his stepson. What the heck did I get myself into? he thought.
“Basically,” Iribe explained to the crew, “he’s here to organize everything that’s going on. Laird, why don’t you introduce yourself to the guys? Tell them how you got into the industry and what you’ve been up to lately.”
“Sure,” Malamed replied, waving a hearty hello to his new colleagues. “I suppose I should start by answering the question you’re probably all wondering: yes, I do realize that I’m the only one wearing a button-down shirt.”
The uncool appearance of his group, while putting him at ease if only because he didn’t have to try too hard, also reminded him of how he would’ve appeared while working at Activision twenty years earlier, the game publisher responsible for powerhouse franchises like Call of Duty, Guitar Hero, and Skylanders.
Activision was an exciting place to be when Malamed joined in 1994, at a time when the biggest buzzword in the industry, multimedia—which was why Activision had targeted him in the first place—offered endless upward mobility, despite the toil it sometimes took to get work done. It was the struggle of that experience that made him fall in love with making games; and, along the way, Activision fell in love with him making them. From there, Malamed quickly ascended to directing and/or executive-producing titles like Zork: Grand Inquisitor (1997), Star Trek: Voyager-Elite Force (2000), and the first-ever Call of Duty (2003).2
“Flash-forward several years,” Malamed told the group, “and this will connect to why I’m here with you today: we bought Red Octane, the creators (along with Harmonix) of Guitar Hero. The notion at the time was that we wouldn’t merge them into Activision; they’d stay their own business unit, their own supply chain and hardware team. So Mike Griffith, our CEO at the time, asked me to be the SVP of production on that.” Malamed got lost in the memory, a smile dangling from his face. “I remember saying to Mike: But I know nothing about hardware! I’ve been working on software my entire career. He told me: you’ll learn it. And he was right. I had a really good team, so that was helpful. But we did it. We did it together. And so I was there to take Guitar Hero all the way up”—referring to the runaway success of Guitar Hero and its many sequels, and then with a self-deprecating grin Malamed finished by saying, “and then, yup, all the way down”—referring to the bomb of Guitar Hero 5 and all the iterations that came after.3
Tiny moments like that—where Malamed felt the beginnings of a bond with the small group in this room due to his self-deprecation—served as a great reminder that his difference in age was irrelevant in the face of their shared love of games. It had been over a year now since he had left Activision to pursue some the nongaming interests he had missed out on over the years; teaching part-time (at USC), consulting for a charity (the Bill and Melinda Gates Foundation), and training for an upcoming slate of marathons (because he loved running almost as much as making games).4 But as he recounted some of the greatest hits from his Activision days, he realized how much he craved achieving that kind of success again.
“Guitar Hero just blew up,” Malamed explained. “I was a part of that cultural phenomenon. And my little piece of it—making sure that it go out on time and on budget and had good marketing—was just one piece of everything needed to make that happen; but it was a piece that . . . I don’t exactly know how to describe it. But it feels like everything.”
To some in the VR community, Oculus’ hiring of Malamed was a cause for concern. As summed up by one user on MTBS3D: “I hate to jump to conclusions because I don’t know the guy, but Activision is one of my least favorite companies, and their business strategy . . . [has] made for some really unethical business-over-game-design choices . . . Maybe a little compromise needs to be made to get to big markets with big hardware, but I’m still concerned about the ‘open-sourceness’ spirit going forward.” These sorts of gone-corporate concerns were enhanced when, in an introducing-our-new-VP interview with GIBiz, Malamed talked about competing with console-makers and suggested that the consumer version of Rift might cost more than originally thought.5
As someone who typically operated behind the scenes, Malamed wasn’t used to being in the crosshairs of internet drama. Which is why it meant so much to him when, unprompted, Luckey addressed these concerns head-on.
“Laird is a fantastic guy,” Luckey wrote on MTBS3D, “and I would not have hired him if he were not a perfect fit for Oculus . . . he has a skill that, frankly, we lacked as a company: getting a consumer product into the hands of as many people as possible. If this guy were in it for the money, he had plenty of options that don’t involve a scrappy startup! We would not have hired him if we thought his vision was different than ours, and his position as COO still reports me to me at the end of the day. If I don’t want to go in a particular direction, then we don’t. We want to make a great headset that gamers can afford, not a luxury item. We know what happens when you launch a consumer product at $599, no need to repeat history.”
As the new COO, Malamed wanted to prove his usefulness right away, and he figured that the best place to begin was by taking all the finance stuff off Iribe’s plate. To ask and answer questions like: What do we have in the bank? What bills do we have to pay? And ultimately, how are we doing?
“This is a logistical nightmare,” Malamed told Iribe, by the end of his first week.
“Is there anything, specifically, that you’re referring to?” Iribe asked.
“One of our Kickstarter backers lives in Angola,” he said. “I have no idea how we are going to get a unit to this person. And that’s just one country. We have Kickstarters in 109 more! I started talking to the freight-forwarding company that Nate had been in touch with and they basically said, ‘Oh, we’re going to bring all the units from China to San Francisco, then we’ll send them by small parcel out to the rest of the world.’ I mean . . . that’s crazy! Then you throw in the fact that 35 percent of our sales are outside the US, and also—correct me if I’m wrong—but our Kickstarter doesn’t say we’re going to be charging anyone extra shipping anywhere.”
“No, you’re right,” Iribe replied. “We’ve just been so focused on designing this thing, and trying to get it made on time, that we just . . . you know.”
“Sure,” Malamed said. “Switching gears, what’s the latest on ZeniMax? I remember you said you were still negotiating with them, but is anything drawn up already?”
“Not yet,” Iribe said, shaking his head. “Hang on a sec, I’ll forward you the most recent thing.”
The most recent thing was unfortunately not all that recent. It was from December 10, when Iribe sent over the company’s latest proposal. In it, he offered ZeniMax a 15 percent ownership stake in exchange for a $6 million investment. If that was more than they were comfortable investing, which Iribe knew was a possibility, ZeniMax could still purchase an equity stake at that same rate ($400,000 per 1 percent). And as long as ZeniMax purchased more than a 10 percent stake, they’d receive a seat on Oculus’s board of directors.
In addition to that, and regardless of whatever amount ZeniMax invested—or even if they didn’t invest at all—the proposal also offered a 2 percent stake in exchange for John Carmack serving as a technical adviser to Oculus.
“That’s the most recent?” Malamed asked. “They haven’t countered yet?”
“They haven’t even responded yet,” Iribe replied.
Malamed nearly did a double take. Oculus needed to finalize this deal. Soon. The relationship with Carmack was a pivotal asset. But Malamed tabled the issue for now, moving on to the issue of cash flow.
At this point in time, the entirety of Oculus’s funds came from either the seed investment that Iribe and Antonov had made ($2.5 million), or the money raised on Kickstarter ($2,437,429 minus about 10 percent in fees). Since the hardware was being made at cost, all the Kickstarter money (and a portion of the seed) was being used to pay for the initial batch of ten thousand headsets. This left a little under $2 million, which may sound respectable for a start-up (where the payrolls are generally lean and low due to the true incentive being equity). But even so, the cost of operations quickly added up—especially for a hardware start-up—in which rent, travel, and insurance were compounded by the likes of testing, tooling, prototyping, and paying for wildcard items (like the $30,000 robot that Steve LaValle requested). Plus, of course, there were still software expenses, not only related to building the SDK, integrations, and plug-ins, and so on, but content development as well. From the get-go, Oculus knew that content was king. And while the whole point of shipping DK1 was to empower and entice outside developers, there was still a vital need for in-house content creation. In a few years, the guys at Oculus hoped they would be in a position to fund numerous projects—not just internal ones, but external ones too, funding them from scratch, or postdemo, or during that critical home stretch. That was the true goal, the hopefully-one-day dream. But for now all Oculus could afford to do was contract Paul Bettner’s small studio. And as Malamed was explaining to Iribe, they couldn’t even really do that. Not at the rate that Bettner and Oculus eventually worked out: $100,000/month.
“That’s a sizable expense,” Malamed commented. “It’s one of many sizable expenses. And we’re a small start-up.”
Iribe nodded, appreciative. As much as all this sucked, he needed to hear it.
“I mean,” Malamed continued, “I did a quick burndown of our cash chart. And by my rough calculations—and keep in mind I put this together quickly, and obviously don’t yet have all the necessary information—but roughly speaking: even if we continue to sell devkits online, and even if we can avoid bringing on any new hires, we’re going to be completely tapped out by midsummer. I’d say we’ve got six months, tops.”
“Six months?” Iribe asked.
“Something like that,” Malamed replied.
“Okay . . .”
“Yeah . . .”
“Well,” Iribe said, almost chuckling, “that’s a little tighter than I was expecting. But not totally surprising. I guess we’ll just need have to be more aggressive with our Series A.”
“Exactly,” Malamed replied. “I’m looking forward to that. And forgive me for stating the obvious here, but given the timing, a good showing at CES would really go a long way.”
DAYS LATER, ON JANUARY 6, THE WORDS LAS VEGAS SPARKLED IN NEON PINK above the entrance to Central Hall—the crown jewel of CES, where the latest in audio, video, and entertainment were all on display—as a seemingly endless flood of showgoers elbowed their way toward a panoply of soon-to-be-released smartphones, computer processors, and glorious 4K televisions.
New and old, big and small, hundreds of companies demoed upcoming products from booths on the trade show floor. Oculus, however, was nowhere to be found. Because all those booths had been rented many months before. As were all the conference rooms on hand, as well as at nearby hotels. In fact, miles away from the hustle and bustle, all Oculus could get was a suite on the thirty-sixth floor of the Venetian.
Although this location would make it difficult to lure media coverage, the Oculus guys on hand—Luckey, Iribe, Mitchell, Patel, and Chen (plus their PR duo: Jim Redner and Eric Schumacher)—scrambled to make their suite look as professional as possible. All things considered, the guys had done a pretty good job—hanging a few banners, scattering some swag, and setting up a photo-friendly demo station beneath a chandelier in the center of the room. The room itself was opulent—with a piano, antique chairs, and so much gold trim that King Midas jokes felt obligatory—but compared to a booth at the Convention Center, or even just a typical hotel conference room, Oculus’s ostentatious setup felt like an odd place to try and launch a revolution. “That is: if we can actually get The Verge to make the trek.”
“Yes,” Mitchell said, laughing. “If we can somehow get The Verge to the Liberace Suite—and especially if we can get [Editor in Chief] Josh Topolsky to stop by—then we absolutely need to bring our A game.”
“But, Nate,” Luckey playfully objected, “whatever do you mean? Here at Oculus we always bring our A game. We don’t even have a B game. Who do you think we are: Ouya?”
“Hey!” Iribe chided half jokingly. “None of that, no negativity! We are shiny, happy people and we just want to share the Oculaid.”
“But of course!” Luckey cheered in response. “Oculaid for all!”
Over the next few hours, Redner and Schumacher were able to get some reporters to trek to the Venetian. Including a small crew from The Verge, led by journalist Nathan Ingraham.
“Thanks so much for making it out here!” Mitchell chirped, ushering them inside.
As the crew set up to film a “hands-on” video that would serve as a visual complement to Ingraham’s article, Mitchell casually asked if The Verge cofounder and editor in chief Josh Topolsky might be joining them.
Unfortunately, Topolsky was back at The Verge’s trailer, where he’d likely be holed up most of the week, overseeing the multitude of podcasts, video streams, and articles that they’d be running throughout the week.
For Mitchell, not getting to demo the Rift for The Verge’s key tastemaker was a bummer, but hardly any reason for disappointment. Most important, Oculus had managed to drag a high-profile outlet out to the Liberace Suite; and if this went well, then perhaps word would spread.
The resulting article—published later that day—wasn’t especially glowing.6 But there were enough pluckable quotes in there—like “the immersion trumps all” and “the story behind Oculus is almost as interesting as the Rift itself”—that Redner and Schumacher could dangle to other outlets and possibly parlay into additional coverage. And while the PR guys focused on that, Luckey and Chen carved out time to walk the show floor. With thousands of vendors and booths as far as the eye could see, it was hard not to feel a little bitter about Oculus being so far away from the melee.
“If we were down here,” Luckey said, “we’d win every Best in Show. Can you imagine what our line would be like? I bet we’d cause a fire hazard!”
“Dude,” Chen said. “Did you just take pride in causing a theoretical fire hazard?”
Luckey laughed. “You know what I mean.”
“Yeah, I also think that if we were down here we’d crush all these jokers. But whatever coverage we could get by being on the show floor here, we could probably still at GDC. And we’ll actually have a finished devkit to show there. So, yeah, getting some love from WIRED or IGN would be make us feel good. But tangibly speaking: What’s the gain?”
“Brendan says that VCs love that stuff,” Luckey responded.
“He’s probably right,” Chen said. “But since he’s the one who has to deal with VCs, that’s what we call a Brendan Problem! Have a little faith in Eric and Jim. The fact that they were able to line up any interviews on short notice is impressive.”
Luckey’s attention shifted. “Oooooh!” he said, looking at his phone. “HipHopGamer is here!”
HipHopGamer (real name: Gerard Williams) was a passionate, do-rag-wearing YouTube personality whom Luckey had clicked with during an interview at PAX Prime. He loved HipHopGamer’s carnival-barker-like enthusiasm (declaring the Rift “the best device ever created—ever created!—in the video game industry”) and his eccentric style (i.e., he traveled around with a WWF-sized golden championship belt).
“Tell him to visit us later at the Liberace Suite,” Chen suggested. “Or tell him to meet us at the Steam Box. We should probably check that thing out.”
The talk of the show thus far (at least among gamers) was the first iteration of Valve’s long-rumored “Steam Box.” Those rumors started in March 2012 when—you guessed it: The Verge’s Josh Topolsky—reported that Valve had been “secretly working on gaming hardware for the living room.”7 Dubbed the “Steam Box,” this gaming machine would be powered by Valve’s still-in-development, Unix-like operating system (SteamOS) and mark Valve’s first foray into the hardware business. Unlike traditional hardware makers, however, Valve would actively be seeking third-party manufacturers to partner with. This was because, at the end of the day, Valve’s interest in hardware had almost nothing to do with hardware at all. Their hardware play, really, was about protecting their software. Specifically it was about protecting Steam.
Steam was Valve’s online store, the place PC gamers logged into each day to play their favorite games. With an install base of over 125 million users and an annual revenue of over $3 billion, Steam had a near monopoly on the PC gaming market. And like all wise companies’ market leaders, Valve was fixated on protecting that sacred turf.
The biggest threat to that turf were other companies’ operating systems since—as an application—Steam was largely beholden to the whims of that OS, such as that of Microsoft’s, which was the most used by PC gamers. Thus far, Microsoft’s updates to Windows hadn’t managed to slow down Steam’s spigot, but this possibility was always a concern.
To avoid being at the mercy of Microsoft and other OS makers, Valve decided to create an OS of their own (SteamOS). The problem was that most people were generally content with the current operating system—at least content enough to avoid the hassle of finding and installing a new one—and there was little incentive for anyone to migrate to SteamOS. Instead, Valve felt their best bet was to create hardware that came with their OS preloaded . . . the Steam Box.
The first company to help Valve build their box was a Utah-based computer maker named Xi3. And earlier in the day, Xi3 unveiled that fruition publicly for the very first time: a modular computer, based on their X7A model that was tentatively dubbed “Piston.” Naturally, Palmer Luckey and Joe Chen were dying to get a look at this thing.
“What can you tell us about Piston?” Luckey had asked Xi3’s chief marketing officer, David Politis, as he welcomed the guys into his booth.
“So Piston is a development stage product,” Politis said proudly, “that has been optimized for gameplay within Steam in Big Picture Mode. You guys are familiar with Steam, right?”
“We are,” Chen replied.
“Okay, great. So I don’t need to go through that whole rigmarole. Instead, let me tell you about how this computer packs a punch.” Politis picked up a nearby Piston unit and handed to Chen. “Small, isn’t it? No bigger than a grapefruit! But don’t let that fool you . . .”
“Don’t worry,” Luckey joked. “We’d never let that happen.”
Shortly after visiting Xi3, Luckey checked his phone and found an in-box overflowing with media requests: outlets hoping for a demo, or an interview, and now willing to make the trip over to the Venetian. Among those queries was another request from The Verge, this one for Palmer Luckey to appear on Top Shelf, their popular, live-streaming show that highlighted the best of what they’d seen at CES. This, Luckey thought, must have been why Mitchell had made such a big deal out of “crushing” that demo with The Verge.
ALTHOUGH THE SIZE OF TOP SHELF’S AUDIENCE WAS MODEST (ABOUT A HUNDRED thousand) and this episode was being filmed in a small, makeshift studio (since The Verge was on location), the interview was still an important one for Luckey; after all, Iribe, Mitchell, and Chen had persuaded Luckey that, for the love of God, he needed to wear a blazer for this one.
Watching Luckey explain his vision from backstage, Mitchell and Chen glanced at each other, as if to celebrate with a telepathic high five. They were pleased by how much more polished Luckey had become in the four months since Oculus’s Kickstarter; he seemed to finally be finding his voice.
At first, Mitchell and Chen tried to class him up—at least to the extent that they could get him to dress like a normal human (shoes, no Hawaiian shirts, willing to wear the occasional blazer). They also tried to temper his energy and enthusiasm and the velocity with which he thought and spoke, which came off as impulsive. Luckey trusted Mitchell and Chen and was willing to attempt something more refined. But dialed-back Luckey was much worse than amped up because, despite the risks and occasional rawness, he lacked his usual and necessary spark to light this revolution. They needed Palmer Luckey: unleashed . . . but with a few exceptions.
They needed him to be conscious about how long he talked; not how he talked (he had carte blanche, sound bites be damned) but how long he went for. And most crucially, they needed Luckey to keep things positive—not just when talking about Oculus, but when it came to partners, competitors, and people online. Palmer Luckey was a child of the internet, which implied that the congruity—between real life and online—was, to him, the epitome of authenticity. It was the authenticity Oculus needed, but as a face of the company he needed to be careful with what Mitchell described as “that flame-war mentality.” Luckey understood this, and agreed it was for the best. He would stay positive, stay engaged, and focus on spreading his love for this technology he loved so much.
“One cool thing about VR,” Luckey said in the interview, “is you actually feel like you’re inside a space. You actually feel like you’re inside the space and that’s huge for immersion . . . and just being there might be powerful enough on its own.”
“There are nerds across America who want nothing more than to just be lost inside the Marathon spaceship,” joked cohost Nilay Patel, referring to the spaceship from Bungie’s popular sci-fi shooter Marathon. “I want to put it on my face really bad!”
Luckey handed Patel the headset for Patel to put on.
“OH GOD” Patel blurted as soon as it was on his head.
“You doing pretty good?” Luckey asked.
“OH GOD! OH GOD I’M IN A SPACESHIP!”
As Luckey explained what was going on inside the headset, he accidentally kicked the headset’s cable and, suddenly, the screen went black. “Uh-oh.” For a few seconds, Luckey’s mind was blitzed with thoughts of how embarrassing this must have looked. But as he held his breath, the image miraculously returned. Luckey raised his hands in celebration and sighed with tremendous relief. “Phew,” he said, putting his hand on his chest. “I swear I had a heart attack.”
There he is, Chen thought. That’s our guy! That authenticity—to be vulnerable, to be sarcastic, to be a kid on Christmas morning—that was Palmer Luckey.
“This is the best day of my life,” Patel raved. “This is ridiculous. Like, I don’t like 3-D things—I usually get a headache and hate myself—but this is legitimately awesome 3-D.”
Upping the ante, Luckey toggled the control and transported Patel to a beach. “So now,” Luckey exclaimed, “he’s in a completely entirely different place in just a few seconds.”
As Patel got the lay of the land, he started leaning his body forward and back to see if this movement was tracked (like his head). “So I can’t, like, peer at things?”
“No,” Luckey answered. “So right now all you have is rotational tracking. Our tracker’s currently an accelerometer, a gyrometer, and a magnetometer. So . . . if you roll your head, we have it on a neck model . . . but if I lean forward and lean backward, you don’t get anything. That’s something that we’re working on for the consumer version. It’s basically a must-have kind of feature to keep players from feeling disoriented, to connect that feel of immersion.”
Shortly thereafter, Patel removed the headset and Pierce asked him how he felt. “I will say,” he explained, “that taking that off and coming back to this space actually felt like returning to this space. As opposed to, like, not looking at a screen anymore.”
“That’s what it’s all about, being inside the game.”
Boom! Chen and Mitchell high-fived each other as the segment came to an end. It had gone so well that Mitchell was able to parlay this success into a visit with The Verge’s editorial staff at the trailer where they were working. And there, finally, he was able to demo the Rift for Josh Topolsky.
“CAN WE TALK ABOUT THE OCULUS RIFT?” TOPOLSKY ASKED A FEW HOURS later on The Vergecast, his outlet’s flagship show. “It’s a virtual reality headset—it’s VR goggles—and it is the exact actual promise of VR that I grew up on hoping and praying and wishing would happen. I put them on tonight and I had the most incredible, inspiring . . . it blew me away on almost every level that I could be blown away on.”
To add some color for the viewers at home, Topolsky’s colleague Chris Grant chimed in: “So Josh and I,” Grant began, “at times in the past have partaken in hallucinogenic substances. And I’m just gonna straight-up-on-ya-here: when you take it off, it is a little bit like when you come down from an acid high.”
“Yes,” Topolsky agreed. “It’s like acid. It is like the experience of being out of your head in a way . . . I’m not paid to endorse this product, I’ve just never been more excited.”
Between Luckey’s appearance on Top Shelf and Josh Topolsky’s unshakable enthusiasm for the Rift—“I used this today,” he tweeted, “and it seriously changed my life”—Oculus became the unforeseen darling of the Consumer Electronics Show. Every journalist wanted to try the Rift, to experience the device that supposedly delivered the promise of VR they remembered from their childhoods. By the third day of CES, Oculus’s schedule was so packed that the team had to start double-booking visits to the Liberace Suite, kicking off a carousel of demos and interviews (with either Luckey, Iribe, or Mitchell) that blurred together over the next seventy-two hours. . . .
TOM’S HARDWARE
Holy Shit!
MACHINIMA
(turning head)
The first thing you notice is that you can look at everything.
WIRED
You feel as if you are within another world in a way that’s never been possible before—at least not in a consumer product.
IGN
It’s immersion on an entirely different level.
CNET
As someone who has always been interested in the idea of VR headsets, and always heartbreakingly let down by the reality of VR headsets . . . I figured it would just be more of the same. [But] I was wrong. Not sure I’ve ever been more wrong.
TECHCRUNCH
So it seems like something that you see in science fiction movies and things like that—as an idea that’s come around—but you’re saying that no one had really figured out a way to do it affordably yet?
PALMER LUCKEY
I don’t know if people hadn’t figured it out. There were people who were going along the same lines [as me] . . . but they weren’t trying to make consumer virtual reality.
HAK5
This has been the dream for quite a while now, where did you guys come from and how did you get into this space?
NATE MITCHELL
The company was actually founded by Palmer Luckey . . . he actually designed and invented the Rift in his parents’ garage over the course of two and a half years. He was always superpassionate about head-mounted displays and virtual reality. And he wanted something that actually allowed him to jack into the matrix for video games.
PALMER LUCKEY
The biggest change is that we’ve developed our own motion tracker sensor chips . . . [which] gives us better data, more samples to work with when we’re doing our sensor fusion, so we can get better tracking overall; and most importantly, because it’s running at 1000 Hz (instead of 250 Hz) and it’s four times faster, we can actually have less latency. Less time between when you make a motion and when it shows up on-screen.
TESTED
So right now you have, with head tracking, roll . . . but you don’t have depth yet. Is that something you guys are looking forward to doing?
NATE MITCHELL
Absolutely. We’re definitely interested in adding positional tracking; both for the consumer version and potentially as an add-on for the developer kit.
POPULAR MECHANICS
When will there be a consumer product for gamers to buy?
PALMER LUCKEY
It would be irresponsible for me to say when we’ll have consumer products. Because I have no idea what feedback we’ll get from developers. And if they say the device needs some new functionality, we’re not going to release a product until it has that functionality!
Hour after hour, these interviews were watched by gamers around the world, piquing the interest of thousands, then hundreds of thousands, then even millions worldwide. But even with all this fanfare, the gaming community’s interest in Oculus still had nothing on their love for Valve, which is why those interviews with Luckey and Mitchell couldn’t hold a candle to an unexpected one that had been granted by Valve’s very own Willy Wonka: Gabe Newell.
Newell rarely spoke to the press—because, as described by Valve engineer Nat Brown, “[We] prefer to speak to customers with products or directly when we have something specific to say”—but, from Valve’s private booth on the CES show floor, an exception was made to speak with The Verge about Steam, their plans for the Steam Box, and even the future of gaming.
THE VERGE
So you’re working on your own Steam Box hardware. Why work with so many partners when you have your own ideal design in mind?
GABE NEWELL
What we see is you’ve got this sort of struggle going on between closed proprietary systems and open systems. We think that there are pluses and minuses to open systems that could make things a little messier, it’s much more like herding cats, so we try to take the pieces where we’re going to add the best value and then encourage other people to do it. So it tends to mean that a lot of people get involved. We’re not imposing a lot of restrictions on people on how they’re getting involved.
THE VERGE
We’ve heard lots of rumors about the Steam Box, including that Valve’s own hardware would be “tightly controlled.” Can you tell us more about Valve’s own hardware effort?
GABE NEWELL
The way we sort of think of it is sort of Good, Better, or Best. So, “Good” are like these very low-cost streaming solutions that you’re going to see that are using Miracast or Grid. I think we’re talking about in-home solutions where you’ve got low latency. “Better” is to have a dedicated CPU and GPU and that’s the one that’s going to be controlled. Not because our goal is to control it; it’s been surprisingly difficult when we say to people “don’t put an optical media drive in there” and they put an optical media drive in there and you’re like “that makes it hotter, that makes it more expensive, and it makes the box bigger.” Go ahead. You can always sell the Best box, and those are just whatever those guys want to manufacture.
“Wait,” Luckey said, as Chen read aloud some interview excerpts before they fell asleep. “What did Gabe say were the characteristics of ‘Best’? Did I miss something?”
Chen quickly scanned through what he had read. “Uh, nope. Don’t think so.”
“That Gabe is a wily gangster,” Luckey said with admiration. “What else did he say?”
“Let’s see,” Chen responded. “Less laggy . . . some stuff about Apple TV . . . Oh! Here’s a good one. They ask if he really thinks that Valve will ‘disrupt the home entertainment space and compete with Microsoft and Sony’? And he says, ‘The internet is super smart. If you do something that is cool, that’s actually worth people’s time, then they’ll adopt it. If you do something that’s not cool and sucks, you can spend as many marketing dollars as you want, [they] just won’t.’”
“Did he say anything about us?” Luckey asked.
Newell had not mentioned Oculus during the interview, but behind the scenes virtual reality was indeed on Valve’s radar. The Oculus guys knew this because they had remained in contact with Michael Abrash and the dozen or Valve employees investigating AR/VR since meeting with them days before the Kickstarter.
There was, however, one potentially significant development. It had started in October when a couple of guys from that AR/VR Team—Tom Forsyth and Joe Ludwig—said to themselves: You know what? It looks like this Oculus thing is really gonna ship! We should try and make a game for virtual reality! Not a toy, not a demo, but a completely immersive, fully fleshed out game.
Given this objective (and given that it often takes years to make a “fully fleshed out game”), Forsyth and Ludwig weren’t thinking about creating something from scratch. Instead, what they wanted to do was port over an existing Valve game to work in VR. Not only would this be a cool thing to do, but it would be a great learning experience in what works, and what does not, in current VR.
So, doing exactly what’s described in Valve’s famous Handbook for New Employees—the one that explains why the desks at Valve have wheels—they rolled their workstations over to the group that worked on Team Fortress 2. The reason they selected TF2 and not, say, a game from the more popular Half-Life or Portal franchises was because they wanted to port a first-person shooter (believing this genre would translate nicely into VR) and because it had an active developer base at Valve (consisting of about twenty employees who worked to ship out updates every two weeks).
Over the next few months, Forsyth and Ludwig tried to figure out dozens of things. And while the challenges were plentiful, they generally fell into one of five areas:
This last challenge accounted for many of the biggest surprises that Forsyth and Ludwig encountered. For example: decapitation. There are times in TF2 when an opponent will defeat you by chopping off your head. On an ordinary game screen, this isn’t a problem; you (standing behind the screen) just watch your avatar’s head get lopped. But when you’re in the game (and your POV is the head of your avatar), this presents a challenge. Because the default would be for your view to stay as your virtual head, but the resulting mismatch—between your virtual head (now rolling on the ground) and your actual head (upright, wearing a VR headset) will make you sick.
Another mismatch had to do with the weapons. In the normal, non-VR version of TF2, your weapons—when in use—ended at your elbows. Which made sense with the typical FPS point of view since your head, without tracking, could only swivel in a few preordained directions. But in VR, with that level of immersion, it was jarring to use a weapon without seeing your upper arm and shoulder. Fortunately, in this instance, there was already some semblance of a fix available; Forsyth and Ludwig could borrow from the third-person perspective—containing the upper arm and shoulder that other players would see when looking at you—and, from there, they could build out a solution that worked in virtual reality.
Even with that fix, there were no shortage of questions that the guys at Valve faced. Why do some players feel sick when their avatar goes up and down stairs? What should we do about the “Scout,” a game character who can run twenty-plus miles per hour, and whose inhuman speed can sometimes be unsettling? And, since everybody’s perceptual system is slightly different, how do we come up with some sort of a standardized approach?
“Do you think they’ll have a version of TF2 ready by GDC?” Chen asked. “Not something perfect, obviously, but just something for the launch?”
“I honestly don’t know,” Luckey replied. “But I hope so, because ZeniMax is dragging their feet [with Doom 3: BFG Edition], so we can really use it.”
Hoping to end the night on a more uplifting note, Chen reflected a bit on how far Oculus had come in such a short amount of time. “I mean, I figured we’d grow fast but this is pretty nuts.”
Luckey wasn’t one to wax nostalgic, but the whirlwind of positive press had nudged him toward reflection. “It is nuts,” Luckey agreed. “When I was younger, my grandpa used to drop off a huge bag every week, completely full of magazines. They weren’t all tech magazines, but he’s the one who introduced me to WIRED and Popular Mechanics and all that other stuff. My grandpa would say that reading that stuff was a ‘small investment to be an informed man.’ I didn’t read them all every week, but a lot of them I did read through.”
“That’s awesome,” Chen said.
“Yeah. But it’s also kind of sad.”
“Sad? Why sad?”
“Well,” Luckey said, now sounding a little frustrated. “Look at all the stuff that’s been written about us this week. There are so many errors, factual mistakes.”
“Dude. You can’t seriously be complaining about the press we’ve been getting.”
“Don’t get me wrong: it’s awesome. I love that the press loves us. But I just never truly realized how many things they get wrong, until they started writing about me and Oculus.”
“You’re such a stickler!” Chen said, playfully rolling his eyes. Chen hadn’t really noticed that trait of Luckey’s until this week. The kid would read a review of the Rift and care more about whether they got the specs right, or quoted him accurately, than the actual review about him and the Rift. Chen wondered where this came from and guessed that it was either a vestige of Luckey having previously wanting to be a tech writer, or because—being so obsessive about the details—Luckey always expected the same from others.
“I know that sounds petty,” Luckey said, “but it adds up. And what happens when they mess up the not-so-small stuff?”
“They wouldn’t do that.”
Luckey shot Chen a quizzical look. “Anyway,” he continued, “it’s sad because either journalists have gotten worse at their jobs, or these articles have always been filled with little mistakes and I just never knew it.”
“Whatever,” Chen replied. “Point is it’s been a hell of a ride so far. I mean, a year ago Oculus didn’t even exist, and I was doing army stuff. But hey: that sleep deprivation training is totally paying off!”
“One year ago, I was here, at CES. Did I ever tell you about my meeting with Sensics?”
“Nah, I don’t think so.”
“They were giving demos of their newest headset—the one that costs seventeen grand—and I applied for a demo. They confirmed it and said they’d do it. I showed up, but someone else was in my slot. They said: don’t worry, come back in fifteen minutes.” So I came back exactly fifteen minutes later and their meeting room was empty and they had gone off to get lunch. Then I managed to harass them the next day into giving me a demo. But I felt pretty sour about it.”
“Wait, how was their demo?”
“Oh,” Luckey said, smiling. “It sucked. I actually told them they should make a headset that returns to their roots and focus on VR, not AR. I actually talked about various optical designs. And they were like, ‘Oh no, that’s what consumers want. They want glasses. Nobody will take it seriously if it’s a helmet.’ Then we parted ways . . .”
“THIS IS MY FRIEND PALMER LUCKEY,” SAID JOE CHEN THE NEXT MORNING, speaking to a hotel employee in the lobby of the Venetian, “and he is, uh, special. You know . . . he’s ‘on the spectrum.’”
This was not true, but after realizing they were locked out of the suite (and that the suite was registered under Mitchell’s name), this was the ploy that Chen and Luckey had chosen to try and get another key.
Drawing on his days as a childhood actor, Luckey did his best to channel Dustin Hoffman in Rain Man. He opened his mouth to introduce himself, but quickly lost the courage to speak; instead, with a flustered tic, he sort of hid himself behind Chen.
“So . . . could you help us out?” Chen asked, nearly batting his eyelashes.
The hotel employee glanced again at Luckey. She appeared skeptical about the situation—but couldn’t deny that Luckey did look rather troubled. “Sure.”
Play it cool. Stay in character. Don’t break . . . don’t break . . . until . . . BING! The elevator doors opened on the thirty-sixth floor and Luckey and Chen exited triumphantly. “I told you it’d work,” Luckey said. “I told you!”
“Well done!” Chen replied. “You were quite the thespian.”
“Did I ever show you BB Rex and the Cowpunk Gang?” Luckey asked.
“No. What’s that?”
“It’s a student film I was in, when I was twelve years old. I did a lot of student films, but that is by far my favorite. Remind me when we get back to Irvine, I’ll send you a link.”
After arriving at their suite, the guys scrambled to get it ready for a day full of demos. And after conducting about a dozen or so, the guys were greeted by somebody from The Verge, who came to present Oculus with an award for their VR demo. Not just any award, but the crème de la crème: Best in Show. Meaning that out of every company at CES—many with thousands upon thousands of employees—this little start-up, with no more than a dozen employees, would be taking home the ultimate honor. It wasn’t the only honor that Oculus won. During the final days of CES, the Rift took home “Best Prototype” (from IGN), “Best Gaming Gear” (PC Magazine), and “The Coolest Thing We’ve Ever Put on Our Face” (in WIRED’s annual “Best of CES” roundup).
As the awards piled up, Chen couldn’t help but wonder if these accolades would go to Luckey’s head. After all, Chen reasoned, a compliment from a girl would have probably been enough to blow up his ego when he was only twenty years old. And while the final afternoon of CES was way too soon to determine if (and how) Luckey might change, Chen found himself encouraged by their final meeting of the week. A demo for the one and only HipHopGamer.
“Yo, Palmer, my boy!” HipHopGamer said, entering the Liberace Suite.
“HipHopGamer!” Luckey shouted, greeting his old pal. “You made it!”
Since HipHopGamer had already interviewed Luckey before, he took the opportunity to chat with Mitchell. “It’s your boy here, HipHopGamer. I’m with Nate. It’s the Oculus Rift. Shut up, listen . . .”
Looking on, Chen’s heart pumped with pride. He and his boys had done real good this week and they were only going to get better. Competition would inevitably arrive, of course, but Chen believed that no one—not even Sony (if that rumor was true)—no one could match the magic that Oculus had; because they were the ones who were going to do it first, do it best, and do it with the most passion. They were the true believers, the guys who cared the most; and they were also the only ones who had a Palmer Luckey.
Say what you will about the kid—and people were starting to say things: He’s a genius! He’s a visionary! Nah, he was just in the right place at the right time!—say whatever you want, but Chen knew this kid was special. Not special in the way that had led them back into this suite, but special in the way that would take Oculus to the promised land. And, fingers crossed, it wouldn’t go to his head. At least that’s what Chen thought after HipHopGamer made a final request.
“Your shirt,” HipHopGamer said, pointing to Luckey’s T-shirt. It was gray and said I LOVE VR (except the “I” was actually Oculus’s logo: an eye). “Where can I find one?”
“You’ll get one in a couple months!” Luckey said. “We’re having them made for all our Kickstarter backers.”
“Come on, man!” HipHopGamer plead. “I can’t wait. Can I buy that one off you?”
“It’s the only shirt I brought with me,” Luckey confided (meaning he’d been wearing the same shirt all week).
“Please, man! You know I love Oculus.”
Luckey looked to Chen for advice and received a shrug. This was their last demo of the week, so sure, why not? “But I’m not going to make you pay,” Luckey said, removing his shirt. “You can just have it. I want you to have it.”
“Thank you! You’re such a good dude. You literally gave me the shirt off your back.”
Chen and Mitchell laughed, and they continued to feel good about Luckey’s generosity until HipHopGamer left and they discovered a small problem: there didn’t appear to be anything in the suite for him to throw on. Which meant that the founder of this newly minted Best in Show company would need to wander through the hotel topless in order to get back to the room where he and Chen were staying. And, well, that did not seem like a good look.
“You can wear my shirt,” Chen volunteered.
“Then you’ll be in the same position as me!” Luckey replied.
“No,” Chen clarified. “I’ll keep the blazer and wear that. You can have the T-shirt.”
Okay. This seemed like a reasonable solution. Except that Chen’s shirt was smaller than what Luckey normally wore so it was pretty snug.
“You look ridiculous!” Mitchell said, cracking up.
“You look like you just robbed a Baby Gap,” Chen added.
Whatever. Good enough. Final day of CES, no one will notice. So Luckey—in flip-flops, cargo shorts, and his Baby Gap shirt—along with Chen—in jeans, no shirt, and a blazer—exited the suite and slithered through the hotel. Fortunately, they managed to avoid running into anyone they knew. Except, for a split second, they thought they saw the hotel employee from earlier. The one they had coaxed into giving them the keycard. And even though, on second thought, they determined it probably wasn’t her, they couldn’t help but imagine what would have been going through her mind: Yup, yes-indeedee, that’s one special kid right there!