Facebook buying virtual reality company for $2bn

2014-03-26 10:50

New York – Facebook is buying virtual reality company Oculus, betting $2 billion (R21.5 billion) that its technology will become a new way for people to communicate, learn or be entertained.

“This is a long-term bet on the future of computing,” said Facebook chief executive Mark Zuckerberg yesterday. “I believe Oculus can be one of the platforms of the future.”

California-based Oculus VR makes the Oculus Rift, a virtual reality headset that’s received a lot of attention from video game developers, although it has yet to be released for consumers. The headsets cover a user’s eyes and create an immersive world that reacts to turning one’s head or moving back and forth.

Beyond games, Zuckerberg said virtual reality headsets might someday be used to enjoy a courtside seat at a basketball game, study in a classroom, consult with a doctor face to face or shop in a virtual store. The technology also has social applications, he said.

“Imagine sharing not just moments with friends online but entire experiences and adventures,” he said.

It is Facebook’s second biggest acquisition in as many months. Last month, the social network announced that it would pay $19 billion for messaging startup, WhatsApp, a deal that hasn’t closed.

“I don’t think you should expect us to make multiple multibillion-dollar acquisitions within a couple months frequently,” Zuckerberg said.

But he called Oculus a “unique” company with a major lead on rivals in technology, engineering talent and developer interest. Sony unveiled its own prototype virtual reality headset at a game-developers conference in San Francisco last week.

Zuckerberg said virtual reality technology is a computing platform unto itself, comparing it to personal computers – which revolutionised the world in the 1970s and 1980s – and mobile phones.

Facebook said yesterday that the deal included $400 million in cash and 23.1 million shares worth about $1.6 billion. Oculus employees are also eligible for an additional $300 million if the company achieves certain targets.

Facebook chief financial officer David Ebersman said Oculus was valued based on the expected returns from the video game industry alone, with a higher return expected if it could expand into communications, entertainment or other fields.

Zuckerberg said Facebook intended to let Oculus continue with its roadmap of development but will help out with recruiting, marketing, infrastructure and opening doors to new partnerships. He said he intended not to make a profit on hardware but to make the product affordable and ubiquitous so Facebook could look at generating revenue from services, software, advertising, virtual goods or other areas.

Facebook says Oculus has received more than 75 000 pre-orders for second-generation development kits for the headset at $350 apiece. The kits will ship in July.

Sales of Oculus’ development kits alone are 10 times bigger than all other headsets in the history of virtual reality, said Antonio Rodriguez, general partner of venture capital fund Matrix Partners, an early investor that put $18.5 million in Oculus starting last year.

He said he decided to invest within minutes of trying on a pair of the goggles. Games he’s seen being developed for the system include one where the player jumps off the side of a building and tries to avoid hitting things on the way down and another where players pick up and move around blocks to construct their own world.

Rodriguez said virtual reality could be used to enhance virtual tours of homes for potential buyers and for getting a flavour for distant locations before planning a vacation, say to Cancun in Mexico.

“Short of the sunburn and the smell of the sweet Caribbean Sea, you’re getting the whole experience,” he said. “They’re going to change the world.”

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.