What is Oculus's competitive advantage?

Let’s quickly skip through the easy ones – Oculus was a first mover in this generation of VR headsets. Because of that, their brand is synonymous with VR. With Facebook’s backing, they have a LOT of money to spend.

One of Oculus’s main competitive advantages is that it has end-to-end control of its hardware design, software API, and content distribution platform. Sony is the only other bigger player that has that, but with their hardware and distribution platform tied to the Playstation hardware, it will be hard for them to expand to wider audiences.

Owning everything means less reliance on external suppliers in their core product, and the ability to tightly integrate the headset, controller, SDK, and the digital store. They have unprecedented control over their end-to-end experience. It also lends itself to brand consistency and clarity – you can visit the Oculus Store to get content for your Oculus-branded headset, and maybe even enjoy exclusive content made by Oculus Studios.

Although branded the “HTC” Vive, the Vive is actually a collaboration between HTC and the game company Valve Software, with much of the core technology coming from the latter. In fact, Valve developed the Vive’s positional tracking “Lighthouse,” which many consider superior to Oculus’s. Valve and their Steam platform also provide the software distribution for the HTC Vive, so when you buy an HTC Vive, you visit SteamVR for content. The two companies are in a close partnership. At the end of the day, they are two different companies, each with its own, very different culture, and strategy within the VR space. Right now, they depend on each other. Who knows what the dynamic will be in the long run.

It’s short-sighted to think of Oculus as a headset. The second Facebook purchased them, they were going to be a platform and one major key to platform success is content. Armed with Facebook’s vast resources, and its recognizable brand, I am sure Oculus has already locked down a number of key exclusive partnerships. Exclusive content helps differentiate your platform and drive adoption. Higher adoption attracts more developers and more content and it becomes a network effect. That, beyond anything, creates a sustainable competitive advantage. Oculus isn’t there yet, but they are well-positioned to get there. We’ll just have to wait and see what happens.