Success of Oculus VR shows interest in virtual reality and games, but smacks some supporters with size of the deal.

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Facebook's acquisition of virtual reality headset maker Oculus VR has had a chilling effect on some of its crowdfunding supporters.

Oculus is the first case of a product going from a Kickstarter campaign to billion-dollar status. The Oculus Rift project, which made more than $2.4 million in its Kickstarter campaign in September 2012, grew into the Oculus VR company that was acquired by Facebook for $2 billion on Tuesday.

Facebook stock plunged nearly 7% Wednesday to $60.38 after the company's second big acquisition in as many months. Last month the social network announced that it would pay $19 billion for messaging start-up WhatsApp.

Oculus may be the biggest success story, but it's not the only one. Others include Logitech's acquisition last year of Chicago-based TT Design Labs, a two-person start-up that launched the TidyTilt iPhone case on Kickstarter in 2011. Terms of that deal were not disclosed. Best Buy also acquired the 2011 crowdfunded PadPivot product to sell under its Rocketfish brand in its stores.

Facebook's blockbuster buy of Oculus has many of the project's original crowdfunding backers and others, most notably Minecraft designer Markus Persson, decrying the development. "We were in talks about maybe bringing a version of Minecraft to Oculus. I just canceled that deal," Persson posted on Twitter. "Facebook creeps me out."

He went on to note in a blog post that "Facebook is not a company of grass-roots tech enthusiasts. Facebook is not a game tech company. Facebook has a history of caring about building user numbers, and nothing but building user numbers."

Dozens of comments channeling similar sentiments surfaced on the dormant Oculus comments page on Kickstarter.com after the acquisition became public.

"I would have NEVER given a single cent of my money to Oculus if I had known you were going to sell out to Facebook. You sold all of us out," wrote a Kickstarter backer named John Wolf. "I hope this backfires horribly for Oculus and Facebook. I will personally discourage absolutely anyone I know from buying what was once an indie dream and is now a soulless corporate cash cow. God, I want a refund so badly."

Added another supporter Joel Edelstein, "It's hard to imagine a product being released that is not hard-linked to a Facebook account. Now instead of just being a VR pioneer, Oculus users can become the first guinea pigs to share everything they do in their virtual worlds with the Facebook database. Part of me is impressed that Facebook has managed to stay relevant for as long as it has, part of me is disgusted by what it does to do so. All of me is worried about what part Oculus has in this puzzle. I just can't, as hard as I try, imagine anything good."

More simply put, Oculus supporter "Incognito" said that, "I'm glad i backed this so you could sellout to facebook. Nicely done!"

A few had a different point of view. "I am not sure why everyone's so upset. Facebook is going to increase resources available to oculus," wrote Jeff McMorris. "It's just silly to think it's going to become an advertising platform. Facebook is smart they saw the future, just like the rest of us here and bought it for 2 billion. They got a bargain."

Since its Kickstarter funding project culminated in September 2012, Oculus also secured venture capital funding. Veteran video game designer and studio head Brian Fargo, who has funded two games, Wasteland 2 and Torment: Tides of Numenera, on Kickstarter, called the deal "one helluva success story" on Twitter.

However, Fargo said in an interview that he understood both points of view. "What makes Kickstarter nice is that you have control, typically, to do what you want, and if there is a windfall, the principals get the money for once, instead of some VC firm," he said. "The backers are upset because, you can say they got their product, but they were backing a dream, and so their concern is that their dream has been gutted. They don't know what it means. Nobody knows what it means."

When creators use crowdfunding, their initial backers are like constituents, Fargo says, and they should be considered throughout the business practice. "We've got to see what they are going to do," he says. "The natural inclination is that it's not going to be what people were promised. If that's the case that's, to me, a real issue. ... Personally, if I was Oculus, I would give everybody their money back."

Current investing rules prevent Oculus from doling out windfalls, says Mike Vorhaus of consulting firm Frank Magid Associates and president of Magid Advisors. "I think everybody knows that they don't get a piece of the company. I think it's clear as a bell. And the (developers) kit (given to those who pledged $300 or more) was a pretty fair value exchange. Oculus can say, 'You got exactly what we promised you. Thank you for helping Oculus and be happy for our continued success. Buy Facebook stock, if you want to.'"

Giving props to Oculus for their success, journalist Joel Johnson — who profiled Oculus last year for The New Yorker — wrote in an essay on Gawker that he likely won't back any more crowdfunding projects. "I still feel as if circumstance removed me from an opportunity to turn my speculative belief in the future of VR and Oculus's role in it into real money. .... I won't be backing any more Kickstarter or crowd-funded projects. It's not that the risk is too great; it's that the potential reward is too little."

In the long run, Kickstarter lets fans help projects move to the next level, however high that may be, its founders have said. Although they would not comment on Facebook's acquisition of Oculus VR, co-founders Perry Chen, Yancey Strickler and Charles Adler have spoken in the past about "blockbuster" projects, including the Veronica Mars reboot film, which rose $5.7 million, and Zach Braff's Wish I Was Here film project, which raised more than $3 million.

"The world we live in is hyper-competitive and often pits us against each other. If someone is winning, someone else must be losing, right? But that's not what we see happening on Kickstarter," they wrote in a post last May. "Over a million people have backed more than one project on Kickstarter. Some have backed dozens and even hundreds. Together we're building a new model for creating. One that all of us can participate in, and one that's getting stronger every day."

Time will tell whether the Facebook-Oculus deal changes Kickstarter's reality.



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