Facebook to Acquire Oculus VR for $2 Billion

Facebook on Tuesday announced that it has reached an agreement to acquire Oculus VR, a developer of virtual reality technology, for a total of approximately $2 billion. The move will provide Oculus necessary money to finish development of its Oculus Rift VR headset and start to market it. But what will it give to Facebook? Apparently, it plans to expand VR beyond gaming.

Oculus is a leader in immersive virtual reality technology and has already built strong interest among developers and gamers, having received more than 75 000 orders for development kits for the Oculus Rift, the company’s virtual reality headset. While games designed for virtual reality are projected to emerge in the next several years, other applications for virtual reality technology are in their nascent stages. Still, several industries are already experimenting with the technology, and Facebook plans to extend Oculus' existing advantage in gaming to new verticals, including communications, media and entertainment, education and other areas. Given these broad potential applications, virtual reality technology is a strong candidate to emerge as the next social and communications platform.

“Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow,” said Facebook founder and CEO, Mark Zuckerberg. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

John Carmack wearing Oculus Rift VR gear

The transaction includes $400 million in cash and 23.1 million shares of Facebook common stock (valued at $1.6 billion based on the average closing price of the 20 trading days preceding March 21, 2014 of $69.35 per share). The agreement also provides for an additional $300 million earn-out in cash and stock based on the achievement of certain milestones.

Oculus will maintain its headquarters in Irvine, California, and will continue development of the Oculus Rift, its virtual reality platform. Thanks to cash from Facebook, the company will have  no problems with further financing and will therefore be able to develop its hardware platform faster and even provide incentives to game developers in a bid to ensure its proper support in AAA titles coming shortly.

The transaction is expected to close in the second quarter of 2014.

“We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world,” said Brendan Iribe, co-founder and CEO of Oculus VR. “We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology, that enables the world to experience the impossible, and it's only just the beginning.”

KitGuru Says: Facebook is acquiring a multitude of companies for two simple reasons: to ensure that its technologies are on par with tomorrow’s need and to be able to shape the tomorrow. We do not know at present whether virtual reality technologies in way that Oculus VR sees and implements them today are indeed the technologies from tomorrow. So we cannot say whether Facebook’s money are well spent. But we do know that Facebook might try to help financing adoption of VR technologies in video games. This will now only help Facebook to become an influential player on the market of advanced games, but to become a leading innovator there. That seems to be quite a lot!

Become a Patron!