Facebook buys Oculus VR, a practical existence gaming company, for $2 billion

Zuckerberg views gaming headset as a “new communication platform.”

FORTUNE — Facebook’s deals are apropos a things of legend. In a final few months alone, Mark Zuckerberg has spent $19 billion on a messaging app, and reports contend he’s paying $60 million for a worker company. Today he announced Facebook’s latest head-scratcher: $2 billion for Oculus VR, a builder of a practical existence gaming headset called Oculus Rift.

It outlines a third time Facebook has paid a billion dollars or some-more for a association with small to no revenue, with skeleton for it to work independently. (Oculus has sole 75,000 pre-orders for growth kits, that cost $350, giving it approximately $26 million in income.)

Facebook (FB) will compensate $400 million in cash, with 23.1 million shares of Facebook common batch valued during $1.6 billion, a association said. In addition, a understanding includes a $300 million earn-out in money and stock. Oculus got a start on Kickstarter, though went on to raise $93.4 million in try appropriation from Spark Capital, Matrix Partners, Founders Fund, Formation 8, BIG Ventures, and Andreessen Horowitz.

So: Why? Is Oculus Facebook’s answer to Google Glass? Is it a amicable network’s unfortunate try to inject itself with uninformed innovation? Is it a asocial play for Oculus VR’s legendary CTO, John Carmack? Does Facebook wish to fill a Zynga-shaped hole in a games-related revenue?

According to a Facebook post from Zuckerberg, he views Oculus Rift as a communication platform. The association and a 75 employees will work exclusively from Facebook and continue their path of building a platform for practical existence games. (This, by a way, outlines a third time Facebook has veered from a acqui-hire plan of shutting down a companies it acquires — a other dual are Instagram and WhatsApp.) But Facebook’s vision for Oculus is most bigger than games:

After games, we’re going to make Oculus a height for many other experiences. Imagine enjoying a justice side chair during a game, study in a classroom of students and teachers all over a universe or consulting with a alloy face-to-face — only by putting on goggles in your home.

The group during Oculus echoed Zuckerberg’s view in their possess blog post:

At initial glance, it competence not seem apparent because Oculus is partnering with Facebook, a association focused on joining people, investing in internet entrance for a universe and pulling an open computing platform. But when we cruise it some-more carefully, we’re culturally aligned with a concentration on innovating and employing a best and brightest; we trust communication drives new platforms; we wish to minister to a some-more open, connected world; and we both see practical existence as a subsequent step.

On a discussion call deliberating a deal, Oculus CEO Brendan Aribe pronounced that as a company solved “a lot of a tough problems,” around gaming and entertainment, a intensity for a amicable knowledge by practical existence became unequivocally obvious.

“Something essentially changes, and we start to comprehend how large this could be if we can see someone else, and we can indeed demeanour during them and your mind believes they’re right in front of you, not through a shade … You get a goosebumps. You see how large this could be, and how amicable it is, and a impact it could have on other industries,” Aribe said.

Shares of Facebook were slightly down by 0.88% in after-hours trading.

Antonio Rodriguez, an financier with Matrix Partners (and early financier in Oculus Rift), remarkable that Zuckerberg isn’t alone in his meditative that a subsequent vital step in computing will use practical reality. “We’ve had a brief bound by protracted reality, with things like Google Glass,” he said. “But a lot of non-gaming use cases are tethered to a smartphone.”

Rodriguez added, “I would not be astounded if, in 5 years from now, instead of a monitor on that desk, we have a span of Oculus Facebook googles.”

Here’s a video Fortune constructed on a headset:

Article source: http://tech.fortune.cnn.com/2014/03/25/facebook-buys-oculus-vr-a-virtual-reality-gaming-company-for-2-billion/