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Protocol Next Up
Defining the future of tech and entertainment with Janko Roettgers.

Facebook is psyched about Quest 2. And a bit cautious, too.

Oculus Quest 2

Good morning, and welcome to the second edition of Next Up. If this is your first, Next Up is a weekly newsletter about the future of technology and entertainment, from AR and VR to smart speakers and TVs, from companies trying to own the next big thing to regulators keeping an eye who's seizing control of the industry. Let me know what you think by emailing janko@protocol.com, and please forward it to your friends and colleagues if you like it!

(Was this email forwarded to you? Sign up here to get it every Thursday.)

Anyway, onto the entertaining stuff …

The Big Story

Facebook's big bet on Quest 2

Facebook's new Oculus Quest 2 VR headset, which the company announced Wednesday, is faster, lighter and features better graphics than its predecessor. Perhaps more important, it's also a lot cheaper: Facebook was able to cut the price by $100, with the cheapest model retailing for just $300. Oh, and it's white now, which makes it look much more like a Wii than a gaming PC.

In other words, it's a mass market product, not something only geeks would buy. Which raises the question: Is the Quest 2 that elusive iPhone-like product many in the VR world have been waiting for? The affordable, easy-to-use device that will finally take VR mainstream? I talked to key Facebook executives to get their take on what Quest 2 means for VR — and what they're worried about.

Facebook execs are excited about Quest 2. "I've been really blown away by it. This is going to be a career highlight for me," head of Facebook Reality Labs Andrew "Boz" Bosworth told me. "It's a pretty phenomenal device," agreed Facebook CTO Mike Schroepfer.

But not too excited. All of their enthusiasm notwithstanding, both Bosworth and Schroepfer tried to manage expectations. "I've already been through one overhyped VR cycle, so I don't want to get to another one," Schroepfer said. "I want to let the product speak for itself and see how it does in the community."

Quest 2 is priced to sell. Asked about his favorite Quest 2 feature, Bosworth replied: "For me, it's the price. It's so important." Schroepfer agreed: "If you make me pick one, it would probably be the price. You can't go into all the details of the amount of work this team did to make this thing work at this price and the volumes we want to sell."

But it isn't meant to sell out. Some of the caution that Bosworth and Schroepfer expressed may be due to the original Quest's market performance. Introduced in May 2019, the Quest 1 sold out quickly — and then remained unavailable for months at a time, including during the valuable holiday shopping season. Sourcing issues for the device's dual OLED displays were said to be partly responsible; for Quest 2, Facebook switched to a single LCD display, and significantly ramped up manufacturing. "We anticipate selling much more than Quest," said Quest 2 product manager Rangaprabhu Parthasarathy.

There's momentum here. Facebook hasn't released any Quest sales numbers yet, but the company did reveal Wednesday that Quest users have now spent more than $150 million on content, with more than 35 titles each generating more than $1 million in sales. "I have a lot of experience taking product [from] zero to one and looking at what those curves look like," Bosworth told me. "I can tell you the feeling that I have being a part of this team reminds me of the feeling I had being a part of early things at Facebook, like Messenger."

And there's more to come. "We're certainly not out of ideas," Schroepfer said. "We've got a lot of things that could dramatically improve the VR experience that we haven't yet gotten into the sort of price and form factor we need for mass production. But there's no laws of physics that say we can't." Bosworth added: "The number of features that I could go invest in that I know would find an enthusiastic audience is growing. It's huge."

Having used the Quest 2 for a little over a week, I have to say that it does feel the closest to a mass market product a VR headset has ever felt. Let's see whether consumers agree.

Overheard

"We're looking at smart TVs on a global basis, and we're wondering: Can we bring our tech stack, or certain capabilities in aggregation, to consumers who are relying more and more on smart TVs?" Comcast CEO Brian Roberts during this week's Goldman Sachs investor conference, confirming Protocol's scoop that the company is looking to license its set-top-box software to smart TV manufacturers.

"COVID has created a unique tipping point." PwC Principal CJ Bangah in a conversation with Protocol on the growing demand for AR and VR. PwC's Global Entertainment & Media Outlook recently predicted that worldwide consumer spending on VR apps, games and video content will reach $1.9 billion this year.

A MESSAGE FROM ROKU

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Watch Out

Google's bid to secure publishers for its new Chromecast

Google sent out press invites for its annual hardware event a few days ago, which is scheduled to be held Sept. 30. The invite promised reporters a chance to "learn all about our new Chromecast, latest smart speaker and new Pixel phones." By now, there have been plenty of leaks about the fact that the "new Chromecast" is actually much more than just another casting device. Here's what we know:

I've also been hearing that Google has been pitching the new version of Android TV to a growing number of publishers as it is looking to gain support for this content-centric approach.

  • It will need that support because Google's new TV OS requires publishers to do a lot more of the heavy lifting server-side, as opposed to the type of on-device APIs used by previous generations of Android TV.
  • An example: With the new system, Google is said to require publishers to make their content offering easy for Google to crawl to improve how it serves content on the device's home screen.

To get the ball rolling, Google apparently asked a number of publishers for ideas on how they would be able to take advantage of the new features of this version of Android TV, such as its advanced voice and assistant functions. The company then promised to pick the best ideas in a kind of contest and pay developers to implement them. (A Google spokesperson declined to comment.)

Google struggled in the past to get buy-in from publishers for some of Android TV's more-advanced features, but the platform has grown a lot in size recently. A flagship Google device could help push publishers to make their content available on Chomecast, but we might have to wait until the end of the month to learn who's actually on board and who's still holding out.

Fast Forward

On Protocol: Facebook is testing AR in public, killing Rift VR. Both moves are highly controversial. Execs told me what the company is doing to avoid a future AR/VR backlash.

YouTube launched a 15-second-video TikTok copycat. The short clips on YouTube Shorts will debut in beta in India first. If you can't beat them, buy them, and then if Oracle buys them instead, maybe go back to the whole beating them idea?

On Protocol: A Q&A with Take-Two Interactive CEO Strauss Zelnick on cloud gaming, subscription models and why the industry can learn a lot from … boy bands?

The social VR world Rec Room now clocks 40 million monthly room visits. That's not quite the same as 40 million users or even unique sessions, as one person can jump from room to room within a single session, but it's still impressive. And Rec Room creators have now built over 3 million rooms.

On Protocol: Apple introduced its subscription bundle. Consumers will get access to Apple Music, Apple TV+, Apple Arcade and iCloud storage for $15 a month. Next up: hardware subscriptions?

Spotify added virtual events listings. The streaming service has teamed up with Songkick and Ticketmaster to promote paid live streams in lieu of all those concerts that have been canceled because of the pandemic.

CBS All Access will be rebranded to Paramount+. I'm convinced that a few years from now, kids will fail their math tests because they'll assume a + simply signifies that you have to pay for something.

On Protocol: U.S. internet advertising will contract more than 3% this year, according to PwC estimates. Online video ad revenue will be flat, though, and video subscriptions are growing massively as we all keep binging.

Auf Wiedersehen

If you follow me on Twitter, two things: First, sorry for all those bad jokes. Second, you may have noticed that I'm a bit obsessed with FCC filings for consumer electronics devices. One of the weird things I've noticed browsing those filings for years is that Amazon uses oddly named shell companies for its devices. The company's Echo speaker was registered by Reny 7 LLC. The Echo Input? Gargantuan LLC. The Echo Sub? Lindland LLC. There's also 360 Engine Burns LLC, Midnight Dawn LLC, Harper LLC, and lots more. Chances are, someone in Amazon's legal department is just using some random word generator to come up with these names, but I like to imagine that it's really Jeff Bezos, writing a young adult sci-fi mystery, one FCC filing at a time. If you happen to know the real story, please email me! Otherwise thanks for reading, and enjoy your weekend, wherever you are. As for me, I'll be in Lindland, watching gargantuan 360 engine burns till midnight dawn.

A MESSAGE FROM ROKU

OneView

Introducing the OneView Ad Platform. From Roku.

A single platform for marketers and content owners to reach more cord cutters and measure performance using TV identity data from the No. 1 TV streaming platform in the US. Advertisers can manage their entire campaigns – including OTT, linear TV, omnichannel, and more – all in one place.

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Correction: This post was updated at 8:32 a.m. PT to correct Andrew Bosworth's title.

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