ERTS Electronic Arts Inc. (MM)

By Deepa Seetharaman 

To Mark Zuckerberg, Pokémon Go wasn't just a fad from last summer. It was a sign that augmented-reality technology was coming more quickly than he expected.

That helped the Facebook Inc. chief executive realize that augmented reality might catch on sooner than rival virtual reality technology -- where Mr. Zuckerberg had placed his biggest bet. On Tuesday, Mr. Zuckerberg announced at Facebook's annual F8 developers' conference that Facebook would make its augmented-reality tools, which mix the physical and digital worlds, available to third-parties to create custom masks, filters and other effects. Early partners include Nike Inc., Electronic Arts Inc. and Warner Bros.

"I think people look at this stuff and think: OK, that's kind of fun, kind of primitive, this is just what kids like doing today," Mr. Zuckerberg said in an interview last week at Facebook's headquarters in Menlo Park, Calif. "But we look at that and we see the beginning of a platform."

Facebook's focus on augmented reality at F8, which takes place Tuesday and Wednesday in San Jose, Calif., is a major new salvo in Facebook's competition with Snap Inc.'s Snapchat. Facebook's smaller rival popularized simple augmented reality tools, such as Snapchat filters, which overlay masks or dog noses on users' faces. Also on Tuesday, Snapchat introduced a new feature to capture backgrounds.

In Mr. Zuckerberg's view, Facebook's nearly two billion users favor more immersive mediums like photos and videos, and will increasingly use their cameras to interact with the world. Last month, Facebook tried to make the camera more central to the use of the app by adding a "swipe right" move to open the camera. But Facebook is still most popular for its news feed, the stream of information whose design hasn't changed significantly in a few years and where text still plays a significant role.

Facebook had seized on virtual reality to vault the company into the next generation of technological interaction. By buying virtual-reality company Oculus VR for more than $2 billion in 2014, Facebook was seen to have placed its chips on virtual reality, in which users are fully immersed in a fabricated world, over augmented reality. Mr. Zuckerberg said virtual reality would become the next major computing platform after mobile devices.

But virtual reality has struggled to take off, at Facebook and at other companies developing the technology. Oculus built a headset to experience virtual reality, but it faced production delays and was expensive to purchase. In addition, no game or application has caught on as a must-have that would make a broader audience buy into virtual reality.

Pokémon Go did that for augmented reality last July. Mr. Zuckerberg declared himself a fan of the game that displayed characters on a sidewalk through the smartphone screen.

"I think VR and AR are two sides of a coin," Mr. Zuckerberg said in the interview.

Over the last year, augmented reality has figured more prominently in his vision of how people will communicate, shop and consume information in the future. Mr. Zuckerberg said both technologies would serve as the next computing platform over the next 10 to 15 years.

Last year, Mr. Zuckerberg said his biggest takeaway from Pokémon's success was that most people would be introduced to augmented reality through their phones, not through glasses, as he previously expected. That made the barrier to using augmented reality much lower than virtual reality, which leans heavily on costly hardware. (Facebook is still developing augmented-reality glasses.)

"If you look at how we use our screens today, about half the time is TV -- so pretty immersive -- and then half the time is phones and computers -- so more just like transitory, utility," he added. "Even in that long-term case, maybe half of the use case will be virtual reality."

Facebook's focus on virtual reality means it has devoted much less time and investment to augmented reality. It made a minor acquisition last year of a startup called MSQRD, which also creates face filters. Facebook's embrace of augmented reality faces competition from companies like Snap; Microsoft Corp.; which is developing an augmented-reality headset called HoloLens; and Magic Leap Inc., an augmented-reality startup backed by Alphabet Inc.'s Google.

Mr. Zuckerberg said he eventually hopes to offer a much broader range of services through the app's camera using augmented reality, such as displaying purchase information for a bottle of wine or a tour of the Colosseum, along with illustrations of what it would have looked like during the Roman empire. Augmented reality could open the door to new styles of art, Mr. Zuckerberg says.

Facebook could even combine its augmented-reality tools with its facial-recognition technology to help users who need to be reminded of someone's name, Mr. Zuckerberg said. But that raises thorny privacy issues. "There are many, many things to figure out," Mr. Zuckerberg said.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

April 18, 2017 13:45 ET (17:45 GMT)

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