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Why Google Is Doubling Down On VR (Hint: It's Not Oculus)

This article is more than 8 years old.

More than a year and a half after Google introduced what still looks more like a mockup of a virtual-reality device than a real virtual-reality device, it's finally getting real on VR. But not for the reason most people seem to think.

Today, Google confirmed that it has created a new virtual-reality group headed by Clay Bavor, a vice president for product management who has headed apps such as Gmail, Docs, and Drive--and Cardboard, the cheapo device that turns a smartphone into a crude but surprisingly effective VR headset.

The assumption by many observers is that Google is playing catch-up to Facebook's Oculus, which just released its high-end Rift device, and other VR headsets such as the Oculus-powered Samsung Gear VR introduced last fall.

But the search giant is playing a rather different game than Facebook, in particular, and other makers of VR devices. For one, it's betting that smartphones will be the route to a mass market for virtual reality. (Samsung is also betting on the smartphone, but only its own smartphones, at least for now. If you have an iPhone, or any Android phone besides two Galaxy S 6 models, you're out of luck.)

Cardboards can be had for less than $10, which makes them not only cheap enough to be impulse purchases, but cheap enough for many companies to give them out free. The New York Times, for instance, gave out 1 million of them to subscribers to jumpstart its move into VR content. As primitive as they look, it has been clear--and now is even clearer to everyone--that Google has been putting serious thought and effort into Cardboard.

Given the Oculus' high price--$600 plus a capable enough personal computer at a cost of at least $1,000--it will not be a mass consumer device anytime soon. Moore's Law will change that sometime down the road, but not for at least a year or two, maybe more.

What Google aims to create is a critical mass of users--tens of millions and eventually hundreds of millions--for virtual reality content that will keep its advertising system humming for decades to come. In that sense, it's not really competing with Oculus, which for the foreseeable future will be mostly for hard-core gamers.

Already, YouTube has created a dedicated VR channel, positioning itself for a shot at becoming a key portal to VR games, films, and other content. That might be reason enough to double down on VR now.

But beyond that, Google views virtual reality as a medium with a lot of potential for advertising. Maybe even advertising that's at least as compelling as television ads, which still rule the industry in terms of dollars spent because they can tell brand stories better than most any other kinds of ads. "Brands see this as a new way to tell their story," says Andrew McGovern, vice president of media and entertainment for VR studio IM360.

And make no mistake: Even if VR users may not want to see ads any more than they do on TV, they're going to get them. Marketers at the Cannes Lions ad gathering last year crowned Cardboard as the winner in the event's mobile category. "Cardboard has democratized the experience," says Adrian Slobin, vice president and managing director at the digital ad agency SapientNitro.

Already, many brands are using Cardboard as the delivery vehicle not so much for outright advertising, but for buzz. North Face, Gatorade , Dewar's, Volvo, and others have created VR experiences to show they're ready for whatever's next. "They're using it to get people excited about what they're trying to get across," Aaron Luber, Google's head of partnerships and business development for Cardboard, told me last fall.

Even if Cardboards or smartphones themselves ultimately don't pan out as the central virtual reality device, they surely will be the way most people will first experience it for the next couple of years. After that, Google has another bet on a related company, the still mysterious augmented-reality firm Magic Leap in which it has invested an undisclosed amount, that could pick up from Cardboard if VR really takes off.

Knowing Google's founders, advertising isn't necessarily the key driver for their renewed push into virtual reality. If anything, Larry Page and Sergey Brin are more driven than ever by the potential of other, more world-changing products and services than ads, such as self-driving cars, robots, health care, and Internet balloons.

But they also know profits from those ventures are pretty far off. Carving out a position in what could be the next great mass medium is also smart business.

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