Facebook announced Tuesday that it has agreed to buy the virtual reality technology company Oculus VR, which makes the Oculus Rift headset, for about $2 billion in cash and stock
The Oculus Rift made its public debut at the 2012 Electronic Entertainment Expo, the video game industry’s largest trade show, after project gained prominence on Kickstarter, raising over $2 million in the summer of 2012. The company went on to raise more than $91 million in venture funding in 2013. With this exit, the Oculus Rift is easily the most successful Kickstarter project of all time, says Mashable.
Facebook CEO Mark Zuckerberg published a statement today saying the deal reflected his belief that virtual reality could be the next big computing platform after mobile, a technology the company has spent most of the last several years adapting to, for the most part successfully.
“Oculus already has big plans [in gaming] that won’t be changing and we hope to accelerate. The Rift is highly anticipated by the gaming community, and there’s a lot of interest from developers in building for this platform. We’re going to focus on helping Oculus build out their product and develop partnerships to support more games. Oculus will continue operating independently within Facebook to achieve this,” Zuckerberg said.
Once it’s a gaming platform, Zuckerberg plans “to make Oculus a platform for many other experiences.” That might include “enjoying a court side seat at a game” or “consulting with a doctor face-to-face,” he writes, all “just by putting on goggles in your home.”
Original Oculus Rift founder and designer 21-year-old Palmer Luckey and others working in virtual reality have expressed similar visions.
“When VR is going to be exciting is when it gets as good as real life at everything,” said Luckey during an interview with PC Gamer at CES 2014. “And you start to say, well, why would I travel on a business meeting across the world just to go sit face-to-face with people, if we can just plug in Rifts and get all of the same nuance of communication we could have gotten otherwise.”
The deal, valued at about $2 billion based on a Facebook stock price of $69.35, includes $400 million in cash and 23.1 million shares of Facebook common stock, and allows for an additional $300 million earn-out in cash and stock based on milestones. The purchase also marks Facebook’s first major consumer-facing hardware play for the usually software-oriented company.
The purchase is expected to close in Q2 of 2014. Oculus has taken over 75K orders for its virtual reality headset so far. Those headsets have been developer editions designed to get developers interested in playing around with VR technology. The most recent “Crystal Cove” prototype features a full 1080p display and more sensors to detect and position users in virtual environments.
The acquisition is one of several bets that Facebook, with about 1.2 billion users worldwide, is making in its effort to anticipate the future and secure its dominance of social communication. Facebook’s latest billion-dollar buy closely follows its deal to purchase messaging application WhatsApp for $19 billion in cash and stock.