Oculus just officially announced that they’d be winding down Story Studio, the company’s internal VR film studio which produced first-party VR shorts like Lost, Henry, and Dear Angelica. Along with the closure, the company also says they’re earmarking $50 million to invest in non-gaming experiential VR content, and in doing so reveals a major reason why the company opted to shutter the studio.

Oculus announced the internal Story Studio at the start of 2015, saying that its mission would be to explore VR film and inspire the world to see VR as a medium for narrative and storytelling.

At the start of 2015, that made a lot of sense. The creative community at the time was still largely wrapping its head around the idea of VR, and among those that had, figuring out how to actually produce VR film content present a new challenge.

“When we started to show people [the Oculus Rift] in Hollywood, their question was ‘how do we get started?’… We said ‘you pick up these gaming tools like Unity or Unreal and you start making something’, but that’s not natural for [cinema creatives],” then-Oculus CEO Brendan Iribe told me at the time the studio was announced.

‘Lost’, the first VR short film released by Story Studio | Photo courtesy Oculus

So along came Oculus Story Studio to show Hollywood what game developers already realized: that VR could change the face of their medium. The studio’s shorts—Lost, Henry, and Dear Angelica—were polished appetizers designed to whet the appetite of the film community for a full course of immersive narrative that VR could offer. Though they were great demos for that purpose, the pieces themselves lacked gripping must-see narratives.

Now, two years and four months later, you could say that Oculus Story Studio achieved their mission; innovate filmmakers risk being considered ‘behind the curve’ if they aren’t at least thinking about how VR will transform storytelling. Immersive content has become a key attraction at major film events like Sundance and Tribeca, and many of Hollywood’s biggest names have since put a toe or even a foot into the warming VR waters, and things are continuing to grow.

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Lost, Henry, Dear Angelica, and Quill set the foundation upon which VR storytelling sits today. The Story Studio team are pioneers in VR development […],” the announcement of Story Studio’s closure reads.

‘Henry’, Story Studio’s first release, would take home the first ever Emmy for ‘Outstanding Original Interactive Program’ | Photo courtesy Oculus

And so Facebook is sensibly winding the studio down as part of a larger internal reorganization of Oculus which in the last few months has seen founder Palmer Luckey departing the company, CEO Brendan Iribe stepping into a new role as Head of Rift, and the hiring of Hugo Barra as the new Head of Oculus, amidst other shuffling.

Oculus says they’re earmarking $50 million—of the $250 million they recently committed to invest in VR content—exclusively for external investments in “non-gaming, experiential VR content.”

“In the same way we invested in the third-party game developers who made the incredible content lineups for Rift and Gear VR, we’re going to allocate more resources to third-party creatives to build out the VR storytelling library,” the announcement continues.

‘Dear Angelica’, Story Studio’s third release, necessitated the creation of ‘Quill’ a VR paint app now available for the Rift | Photo courtesy Oculus

Claiming “mission accomplished” is a nice way to let everyone involved (deservedly) walk away from Story Studio proud of their work. But it isn’t the only reason it made sense to close the internal studio. Another was due to an awkward relationship to external studios who are trying to build real businesses in VR film.

Studios like Within, Baobab, Penrose, Felix & Paul, and plenty more have raised significant money in the pursuit of becoming defining studios in VR film. These companies would often rub elbows with Oculus Story Studio at big film events like Sundance and Tribeca, ultimately all competing for the same limited amount of attention.

But as Oculus is a major VR platform holder, it often ended up shining the spotlight most strongly on its own internal Story Studio works, with big press events and even preferential placement on the Oculus storefront; not exactly the kind of relationship you want to have with external creators whom Oculus wants to court and help thrive on their platform.

You can imagine the tough internal decision making too: if Oculus’ the ultimate goal is to create a self-sustaining ecosystem of VR content, how does it look to your external content creators when the company is internally funding and releasing competing content for free instead of supporting the creators that the company hopes to one day thrive on the Oculus platform?

While Story Studio was surely important in getting some quality content produced to inspire folks with the potential of VR film, Oculus’ decision to wind it down in favor of throwing funding at external studios makes a lot of sense when you take a step back and look at what the company’s overall goal is: to be a platform and hardware maker, not a content producer. The move greatly improves the optics of Oculus’ priorities, and tells external VR film studios that the company is committed to enabling them, not competing with them.

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