Facebook buys Oculus VR for $2 Billion

Facebook has announced that it has acquired Oculus VR, the company which created the Oculus Rift gaming headset, in a cash and stock deal with a value of $2 billion.

The terms of the deal include $400 million in cash and 23.1 million shares of Facebook stock. The Oculus Rift 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.

“Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate,” Facebook Founder and CEO Mark Zuckerberg said in a statement.

Although the Oculus team was never committed to bringing a consumer version of its VR headset to the market, more than 75,000 developers had already ordered developer kits for the technology — and the early prototypes are said to be very impressive.

Facebook says that “Oculus will remain headquartered in Irvine and will continue developing the Oculus Rift platform”

This is Facebook’s second major acquisition in less than two months. Just last month, it bought messaging service WhatsApp for a whopping $16 billion.

At a recent investor conference, Mark Zuckerberg discussed why he was so interested in the Oculus team and the Oculus Rift, “If mobile is the current computing platform, vision and virtual reality could be platforms of the future” Zuckerberg said, and he described buying Oculus as “a long-term bet on the future of computing”

This is an idea echoed by Chris Dixon, an investor at Andresseen Horowitz, the company that led Oculus VR’s $75 million Series B funding round. On his blog, Dixon described his research into virtual reality and Oculus as a company. He writes, “the more we learned, the more we became convinced that virtual reality would become central to the next great wave of computing.”

The idea that Oculus represents the future of computing isn’t relegated to just investors. Shane Hudson, a London-based web developer, says he thinks that Oculus can offer “a fully immersed experience.” Hudson thinks that experience could extend from tasks such as “playing a game, watching a film, reading a book or even chatting your friends ‘face-to-face’ despite being on the other side of the world.”

Zuckerberg sees Oculus’s current focus around games and entertainment as just the beginning. “Oculus has the potential to be the most social platform ever,” he said. “Imagine not just sharing moments with your friends online but entire experiences.”

Mark Zuckerberg Oculus
Facebook Founder Mark Zuckerberg

Zuckerberg also said “That buying Oculus is a way of investing in the best and brightest players in computing and they are years ahead in terms of technology”

Original Oculus Rift founder and designer Palmer Luckey was just 19 when he came up with the first prototype for the Oculus Rift. Over the last two years, the Oculus team has amassed tons of talent, including many of the best minds in virtual reality and in gaming. John Carmack, the co-founder of id Software — and the lead programmer of Wolfenstein 3D, Doom and Quake, joined Oculus in Aug. 2012 as its CTO.

The Oculus team is brimming with experience in the game industry and in virtual reality, ranging from commercial applications to flight simulators for the Navy and NASA.

Oclulus VR co-founder Brendan Iribe said that he and the Oculus team are thrilled to be “building the future with Facebook.”

Moreover, Iribe says that he’s excited about “bringing even greater resources to our work.” Competition in the VR space is just beginning — with Sony’s Morpheus headset and other players expected to enter the space in the next year. With Facebook, Oculus now has a parent company with immense resources and a CEO dedicated to helping accelerate its visions for computing of the future.

Not everyone sees a Facebook-owned Oculus VR as an appealing future. Markus Persson, creator of Minecraft and known online as Notch, is disappointed with the development. Persson shares his thoughts on his blog, revealing that the Facebook deal will put an end to plans for an official Minecraft port for the Oculus VR.

Similar sentiment is cropping up from other game developers. Of course, Facebook has faced this kind of backlash before, after it announced it was going to purchase Instagram, users threatened to leave the service en masse. Ironically, two years later, Instagram is more popular and more successful than ever.

Zuckerberg is clearly hoping for a similar situation with his latest venture, a little backlash is nothing in exchange for, what he describes in his words, as a “long-term bet that immersive VR is the future.”