This bug originated in 4.11 and has been covered here:
The solution presented in that question was to wait for 4.12 where the latest version of the Oculus audio plug-in will be in place. I’ve just tried 4.12 Preview 4 (from the launcher) with a brand new project, and am still getting the initialization failed message, the same as with 4.11. Here is the relevant part from the output log:
LogInit: XAudio2 using 'Speakers (Realtek High Definition Audio)' : 2 channels at 48 kHz using 32 bits per sample (channel mask 0x3)
LogAudio:Error: Oculus Audio SDK Error - Failed to initialize OVR Audio system: Unknown Error
LogInit: FAudioDevice initialized.
Writing up this new bug report for 4.12 in the hopes that this issue gets fixed by release. Thanks!