Facebook tests ads in virtual reality headsets

Some analysts are predicting a backlash

Facebook has begun displaying ads in its Oculus virtual reality headsets, despite the founder of the platform saying it would never do so.

In what the social network described as an experiment, ads will begin to appear in a game called Blaston with other developers rolling out similar ads.

It said it would listen to feedback before launching virtual reality ads more widely.

It also revealed it is testing new ad formats "that are unique to VR".

In 2014, shortly after Facebook bought Oculus, creator Palmer Luckey told concerned gamers: "We are not going to track you, flash ads at you, or do anything invasive."

But in a blog on Oculus's website, the firm said: "We're exploring new ways for developers to generate revenue - this is a key part of ensuring we're creating a self-sustaining platform that can support a variety of business models that unlock new types of content and audiences."

Users will be able to hide specific ads or those from a certain advertiser and Facebook promised that its privacy policy would remain the same.

"Facebook will get new information, like whether you interacted with an ad, and if so, how... for example, if you clicked on the ad for more information or if you hid the ad."

It encourages customers to share their feedback via the Oculus support page.

Barrier to adoption?

Last month the firm began testing ads in the Oculus mobile app.

Leo Gebbie, an analyst with CCS Insight, said the move was unsurprising.

"Ultimately Facebook is built on advertising revenue and if there was any expectation that it wouldn't build it out into virtual reality, then that is a little naive."

Oculus Quest 2 headsets start at £299, and in the US are also offered for $299, and that price means it is being sold at "incredibly low or even loss-leading margins," said Mr Gebbie.

This could mean Facebook becomes the dominant player, as others are unable to compete.

"The long-term goal is for Oculus to be a platform for virtual reality and augmented reality, with Facebook keen to get as many people as possible using it," he said.

But, he noted, there would probably be a backlash against ads on the headset.

"Facebook doesn't have the best track record on privacy and there is a concern that it will continue to push the boundaries and creep towards something that is invasive."

Piers Harding-Rolls, research director of games at Ampere Analysis, said VR offered big opportunities for the tech firms.

"If people are spending more time using this technology, those that dominate the online advertising opportunity - including Facebook and Google - want to be well-placed to take advantage of any shift in consumer habits, so that they can follow the audience with their advertising networks."

But they needed to be careful about balancing advertising with a good user experience, he warned.

"While there is nothing exceptional about having advertising in games, the intimate and immersive nature of VR means that the consumer experience is likely to feel a lot different and that might represent a barrier to adoption."