Facebook said Tuesday that it will buy Oculus VR, maker of the Oculus Rift virtual reality headset, for more than $2 billion. That’s a hefty sum considering that the company has not yet released a consumer-ready product (a device meant for developers can currently be ordered for $350).
Under the deal Oculus will get $400 million in cash, 23.1 million shares of Facebook stock and another $300 million in cash and stock over time if it meets certain goals. Facebook expects the deal to be finalized in the next three months, and says Oculus will keep working on the Oculus Rift and remain in Southern California, where it is based. So far the device has received positive reviews (see “Can Oculus Rift Turn VIrtual Wonder Into Commercial Success?”).
So what does the social networking leader want with a virtual reality company? Lately, Facebook has been spending a lot of time growing and improving its presence on mobile devices, and founder and CEO Mark Zuckerberg said in a conference call with analysts that Oculus fits in as the social network starts looking ahead for the next shift in how we’ll communicate and experience things.
“Imagine sharing not just moments with your friends online, but entire experiences and adventures,” he said.
While Oculus is today focused on gaming, Zuckerberg gave a few examples of other uses the technology could have in the coming years. He described being able to virtually sit courtside at a game, communicate face-to-face with a doctor, or shop in a store while feeling like you’re actually there.
It might sound pretty strange, but it does make some sense. Facebook was tardy to the mobile party, so to speak, and it doesn’t want to make the same mistake twice. Zuckerberg wants to get where the users are going to go before they can (virtually) go there–even before most know that’s where they will want to go. And he understands it would be silly for Facebook to try to develop virtual-reality technology on its own. It’s much easier to dangle a giant cash pile before a promising startup who’s already doing it.
Of course, Zuckerberg doesn’t expect us to start going on virtual reality vacations with our Facebook friends overnight. He said in the analyst call that it could take five to ten years before virtual reality is commonplace.
Considering the progress Oculus has made since it began in August 2012, this could happen. In that year it brought in $2.5 million through a Kickstarter campaign that originally aimed to raise $250,000 to build developer kits. In 2013 it received millions more in venture funding. In a blog post today announcing the acquisition by Facebook, Oculus’ team says it has now sold over 75,000 development kits. The company previously said it would launch a consumer device with a 1920-by-1080 pixel display late this year.
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