Facebook today announced that it has reached a definitive agreement to acquire Oculus VR, an immersive virtual reality technology, for a total of approximately $2 billion. This 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 is one of several pioneers in immersive virtual reality technology and has already built strong interest among developers, having received more than 75,000 orders for development kits for the company’s virtual reality headset, the Oculus Rift. While the applications for virtual reality technology beyond gaming are in their nascent stages, 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.
So What? One such application of this type of technology is of course the video conference…imagine instead of looking at someone through a screen, or having a multi-way conversation, just popping on a pair of goggles and actually sitting in front of someone in your chosen location. The Oculus claims to be so immersive that the brain can barely tell the difference between that and the real world. You could decide to hold your meetings pretty much anywhere you wanted! Will this be the next major step in the VC world? I hope so…let’s have that next team meeting in the Bahamas please!
“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.”
“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.”
The transaction is expected to close in the second quarter of 2014.