Facebook buy virtual reality company Oculus VR for $2bn

Social media giant Facebook is set to purchase virtual reality device maker Oculus VR – the makers of the Oculus Rift – for $2bn.

The purchase could see Facebook users dipped into the world of virtual reality when browsing through the social site, this could include virtual meetings with friends, and being able to play FarmVille in 3D.

Facebook say it wants to extend Oculus’ work, which is currently focused around gaming, to include media and entertainment education and probably everything you can think of.

The deal includes £400m in cash and the makers of the VR product will also get in on 23.1m shares of Facebook’s common stock. This is valued at $1.6bn – or $69.35 per share.

The agreement also provides for an additional $300 million earn-out in cash and stock depending on performance related targets – although it hasn’t been revealed what these are. It follows Facebook’s recent purchase of messaging service WhatsApp for $19bn.


Writing on the Oculus website the owners, including founder Palmer Luckey (above), said: “At first glance, it might not seem obvious why Oculus is partnering with Facebook, a company focused on connecting people, investing in internet access for the world and pushing an open computing platform.

“But when you consider it more carefully, we’re culturally aligned with a focus on innovating and hiring the best and brightest; we believe communication drives new platforms; we want to contribute to a more open, connected world; and we both see virtual reality as the next step.”

The Oculus Rift headset has so far received more than 75,000 orders for its development kits and only recently announced that its second Dev kit would go on sale.

When the Rift was funded on Kickstarter it raised more than $2m dollars from almost 10,000 backers.

As with all of the purchases Facebook seems to make, including WhatsApp, and previously Instagram, Luckey said not a lot will change with the company.

“Very little changes day-to-day at Oculus, although we’ll have substantially more resources to build the right team,” he said on the company’s website.

However unlike the previous high-profile purchases, which were well established at the point of sale, Oculus is yet to ship to consumers or be available publicly.

In many ways this must increase the scope for influence from its new owners and indicates Facebook’s desire to move the technology forward.

Facebook CEO Mark Zuckerberg said: ”Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow.”

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

In the last 18 months the Oculus Rift has gone from a foam product to being tested and built for by developers and the website still says it is hiring more staff – positions which will be highly chased after the recent news.

CEO of Oculus VR Brendan Iribe said: ”We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world.”

He continued: “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 purchase is expected to close in the second quarter of 2014.

Update: This post has been updated since first publication to include further information on the deal. 

Images courtesy of Oculus VR