What is causing motion sickness when using the Oculus Rift?

Motions sickness can be caused by motion that is seen but not felt or when both system detect motion but they don't match.

Probably you can be fine with static games, or slow paced movements. Race games and shooters may cause it easily.

When playing console games, players usually see the context of the video game, as even if the video is moving, the eye can see it's watching a still screen and that matches the perception of still that comes from the ear. With an integral vision replacement all the player see is the game, so the eyes don't have a context that matches with the ear.

The easy solution would be to let some of the virtual reality goggles transparent, so that player can see something still with the eyes, or placing the player in an environment that matches the forces that the ears expect to feel.

For further info look here motion sickness

In addition to the answers above which are nicely referenced to Wikipedia, I will make a few additional statements.

The motion sickness response is, unfortunately, hard-wired into many people. VR goggles have been around far longer than Occculus Rift, and have been causing sever motion sickness for just as long as they have been around. It is not a phenomenon isolated to the Rift. It is not even isolated to VR goggles.

Back in the early 90s when I first tried on VR goggles, I got so nauseated that I had to sit down for 10 minutes after a mere 2 minute exposure. (Which BTW cost $10 just to try out!)

I experience a similar phenomenon without goggles while playing FPS games, or games with rapid shifts of the background compared to a stationary character. But, without the goggles the effect takes longer to onset. (About 30-90 minutes, depending upon the game.) It has severely limited my ability to play a lot of games over the years. Quake made me want to vomit within 20 minutes, Metroid Prime an hour, etc. etc.

It is believed that this response is an evolutionary advantage gone hay-wire. For most animals, when the visual and vestibular systems are not reporting identical information, a toxin has been ingested. Therefore, vomiting in response to this conferred a survival advantage.

As far as strategies to avoid this:

First, not using VR goggles in the first place is a good one. This limits the gaming potential, but it keeps your floors clean of vomit.

If you insist on playing these games that induce motion sickness, then the best strategy is to play only for short periods of time, and then rest with eyes closed until the feeling subsides. Some people (myself included) find that putting an ice pack over the forehead/eyes can help with the sensation.

Another strategy which I've seen work for people: Fix on a farther away point. While this is not easy to do with a screen that is located about 2 cm from your eyes, you can trick your eyes by relaxing them. When focusing for near vision the eyes constrict, and extreme near vision the muscles around the eye tend to contract, too. By consciously allowing them to relax it will help to simulate the feeling of the eye adjusting to far vision.

I would NOT recommend using anti-motion sickness medication for this use. They are not without side effects, and long term use is not indicated.

Accupressure devices (such as the relief band) have been shown to work for many people. They are not medicated, and would be harmless to try out. But, they will not be a cure.

Source: Personal Experience, Years of Medical Training

Suggestion (Disclaimer: only theoretical) To emulate speed have a fan and sound with fan speed tied to in game motion, if that helps even a little consider emulating other sensory inputs (not cheap). Another one, try to reduce sudden abrupt head motion to a minimum. Due to skewed images and sudden motion, the brain driver gives a false alarm for a neurotoxin. Additionally, your friend will adapt to the feeling after regular use/ training, brain has fascinating adaptive behavior. A word of caution, video games have been known to trigger seizures in children due to abrupt color changes, so proceed with caution, not every brain is wired identically.