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Facebook FB is planning to put ads in its Oculus Quest virtual reality (VR) headset. Blaston, a futuristic shootout game from Resolution Games, along with a couple of other developers, will be the first to take part in this experiment that will be launched over the coming weeks.
The test will use first-party data from Facebook as well as some VR data for ad-targeting. The company is facing headwinds related to ad-targeting due to changes made by Apple AAPL and Alphabet GOOGL division Google in their respective mobile operating systems.
Notably, Facebook stated that Oculus users will have the option to hide individual ads or decide not to see ads from a certain advertiser. Last month, the social media giant announced its plans to test ads for Oculus content within the Oculus App on mobile.
Facebook expects the inclusion of ads to help in attracting more people to VR and to also benefit developers and creators. This is also expected to benefit Facebook’s augment reality (AR) initiatives.
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The move reflects Facebook’s focus on monetizing its VR hardware business. In the first quarter of 2021, strong Quest 2 holiday sales drove Other revenues, which surged 146.5% year over year to $732 million.
Markedly, Facebook plans to invest $3 billion over the next 10 years in the VR and content ecosystem. The Zacks Ranks #2 (Buy) tech giant has been acquiring companies, including several VR game studios, to strengthen its position in the VR/AR business. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Most recently, Facebook acquired Seattle, WA-based BigBox VR. The VR studio’s Population: One was one of the superhit games to release on Oculus Quest 2. Markedly, in April, Facebook bought Downpour Interactive, developer of the VR shooter game Onward.
Per Technavio, the AR/VR market is expected to witness a CAGR of 46% to reach $162.71 billion between 2021 and 2025 timeframe. Facebook’s initiatives not only make it well-poised to tap into this opportunity, but will also boost its competitive position in the VR/AR where it faces competition from the likes of Sony, Apple and Microsoft MSFT, in the long haul.
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