Facebook Introduces Ads to Virtual Reality Headsets

SparkAmpLab Editorial Team
August 16, 2021

Learn about the latest trends in AR/VR technology with SparkAmplify which provides topic recaps on the newest technology updates every month. Below is a recap from June on Facebook's decision to introduce ads to VR headsets. Visit https://www.sparkamplab.com/ to find out more about our monthly topic analyses.

Latest development: Facebook will be introducing ads to its virtual-reality headset, the Oculus Quest 2. These new ad formats will be inaugurated in the shooting game Blaston by Resolution Games during the month of May. 

The deal: Oculus has stated that the ads are the first step to create a “self-sustaining platform [supporting] a variety of business models” where developers can generate revenue and attract new audiences. The ads will follow Facebook’s ad principles, gathering information from the user’s Oculus activity. This includes whether you’ve installed or activated certain apps and even whether you’ve viewed, clicked on, or hovered over an ad. However, the user can still customize their ad experience, such as hiding ads from certain advertisers.

The timeline: Ads will start to be introduced in May, and this experimental period will be used to collect feedback from developers and the community. Depending on its success, ads may become broadly available across the Oculus platform and mobile app. 

The backlash: The decision to introduce ads to the VR game was met with criticism, as the founder of the platform, Palmer Luckey, had stated upon Oculus’s acquisition by Facebook that no ads would be run on its consoles: “We are not going to […] flash ads at you, or do anything invasive”. Many also theorize that the presence of ads in a virtual reality game will be invasive and jarring, thus negatively impacting the experience. 

Users are distasteful of  the “dystopian nature” of the ads: one Twitter user comments, “I'd really hoped [VR was headed in a different direction]... instead we got more facebook ads.”

The decision was unsurprising for tech experts; Leo Gebbie, an analyst at CCS Insight, comments: “if there was any expectation that it wouldn't build it out into virtual reality, then that is a little naïve”. The Oculus Quest 2 headsets are being sold at “low or even loss-leading margins”, and with 97% of Facebook’s revenue relying on ad revenue, making up the profit loss through ads was a clear solution. 

Oculus has reassured users fearful of privacy lapses by stating certain information is off-limits: “we do not use the content of your conversations with people on apps like Messenger, Parties… or any movement data ''. Furthermore, game developers are openly welcoming the decision, as it provides a way to open monetization channels. 

What’s next: Other ad formats and revenue streams are being developed and following the outcome of the ads on the VR console, these will be rolled out to bring about a new era of advertising formats for virtual reality consoles.

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