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Facebook takes $2 billion dive into virtual reality

/ 09:21 AM March 26, 2014

In this Jan. 7, 2014 file photo, show attendees play a video game wearing Oculus Rift virtual reality headsets at the Intel booth at the International Consumer Electronics Show (CES), in Las Vegas. Facebook said Tuesday, March 25, 2014, it has agreed to buy Oculus for $2 billion, betting that its virtual reality may be a new way for people to communicate, learn or be entertained. AP

SAN FRANCISCO, United States—Facebook on Tuesday announced a $2-billion deal to buy a startup behind virtual reality headgear that promises to let people truly dive into their friend’s lives.

Facebook co-founder and chief Mark Zuckerberg said that the acquisition of Oculus was a long-term bet that making the social network’s offerings more immersive would pay off in the future.

“People will build a model of a place far away and you will just go see it; it is just like teleporting,” Zuckerberg said.

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“I do think gaming is a start,” he said in a conference call, referring to the Oculus headset’s original design focus.

For now, Facebook is going to use its resources to make Oculus headgear affordable and ubiquitous, according to Zuckerberg.

The California-based social network does not intend to become a hardware company, but Zuckerberg said it is open to people using the virtual reality devices for immersive shopping experiences at Facebook.

Facebook plans to build on Oculus’ technology, developing the virtual reality headset for other areas such as communications, education, and entertainment.

Oculus shareholders will receive $400 million in cash and 23.1 million Facebook shares in the deal.

Facebook called Oculus, launched in 2012, the leader in immersive virtual reality technology with a strong following among developers.

The company has already garnered more than 75,000 orders for the $350 Oculus Rift headset development kits.

“While the applications for virtual reality technology beyond gaming are in their nascent stages, several industries are already experimenting with the technology,” Facebook said.

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“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” Zuckerberg said in a statement.

“Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

Oculus’s headset earned raves from numerous reviewers at the annual global technology fair CES in Las Vegas in January.

Buying it puts Facebook, the social networking leader, in competition with Oculus rival Sony for development of advanced virtual reality headsets.

Facebook said Oculus will maintain its headquarters in Irvine, California, and continue developing the Rift platform.

Word of the deal stymied some analysts, who noted that the people hot to get hands on Oculus headsets have been hardcore video game players.

“It’s a cool technology,” said Silicon Valley analyst Rob Enderle of Enderle Group.

“I just don’t know why Facebook wants it, unless they are having incredible Google envy. It has nothing to do with social networking.”

The acquisition comes just weeks after Facebook made a deal to buy fast-growing mobile messaging service WhatsApp for more than $19 billion in cash and stock, expanding its global footprint.

WhatsApp is a cross-platform mobile software program which allows users to exchange messages without having to pay telecom charges.

The WhatsApp buy is Facebook’s biggest acquisition and comes less than two years after Zuckerberg’s firm raised $16 billion in the richest tech sector public stock offering.

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TAGS: Buyout, Facebook, Gaming, Mark Zuckerberg, Oculus, Rob Enderle, Silicon Valley, Social Media, social networking, Sony, technology, virtual reality
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