Oculus Evolution Case

Facebook acquired Oculus Rift for approximately $2 billion but some critics are in doubt whether Facebook is the right partner for coming up with a VR gaming platform as in the past some intents of Facebook introducing gaming were considered difficult to maintain and not in line with the social focus of the bigger Facebook platform (Parkin, 2014).

What strategies should Facebook and Mark Zuckerberg follow to make this technology and the business unit Oculus Rift a success in this nascent VR gaming market?

According to Santos and Eisenhardt (2009), for Facebook/Oculos to be successful they should co-construct the boundaries of the company by using three processes: claiming, demarcating, and controlling a market.

Oculus should claim the

Will it remain independent or is Facebook seeking to influence and integrate Oculus into its own business structure trying to make use of synergies in areas such as R&D, Sales, and Administration? To make the decision easier, we could refer to research results published by O’Reily and Tushman (2004) about the advantages and positive empirical outcomes of ‘Ambidextrous Organizations’ that are characterized by a separation of exploratory activities requiring specific ‘processes, structures, and culture’ from exploitative business units maintaining only a very high level management team integration. Following the empirical study outcomes and considering that VR is a highly exploratory business compared to Facebook’s settled social network business, it seems a recommendable decision to keep Oculus Rift only integrated on a senior level that, however, should still allow to share important resources such as finance, assets, and networks. Facebook’s employees can continue to concentrate on its core business without the distraction of creating a new market. Another argument to leave Oculus Rift separated from Facebook is the possible rejection of certain products or strategies, which might be necessary for Oculus to become successful, from a Facebook’s perspective because they are not profitable or do not fit into the current business model. Manufacturing for example devices at cost or below cost with the expectation to generate enough volume and revenue through the sales of content and games is a decision that normally comes with several years of negative cash flow and / or profits. This strategy could be seen as not very attractive for Facebook management but might be an important decision for Oculus on the long run. Keeping Facebook and Oculus management separated avoids inevitable conflicts and makes both companies