Facebook Inc. has agreed to buy virtual reality goggles maker Oculus VR Inc. for $2 billion. The firm said that it would pay $400 million in cash and the remaining amount in 23.1 million shares of the company, which at Tuesday’s close of $64.89, totals to $1.5 billion. The acquisition is expected to be completed by the second quarter.
The latest acquirement of Facebook is the manufacturer of Oculus Rift goggles, a headset, through which, the firm aims to popularize virtual reality. This transaction introduces Facebook into the wearable devices industry, which is rapidly gaining pace. The goggles are expected to be shipped to developers in July and Oculus intends to charge $350 for it.
The two-year-old Oculus was launched when its founder Palmer Luckey managed to raise funds of over $2.4 million to help develop its first product from a Kickstarter campaign. The firm’s headquarters will remain in Irvine, CA and it will continue to develop the Oculus Rift.
Zuckerberg had shown interest in the firm some months ago, when he and other Facebook executives visited Oculus to discuss future prospects. Facebook noticed the hardware maker and the goggles when the firm was demonstrating its Oculus Rift virtual reality glasses at nationwide tech and gaming conventions.
In December last year, Oculus had managed to raise $75 million, led by Andreessen Horowitz, to market its headset for video games. Matrix Partners, Spark Capital and Formation 8 were among the other venture capital backers. Meanwhile, the firm also hopes to use the product in areas like design, film, education and architecture.
According to Oculus, the two firms had agreed to partner because they both envision virtual reality to be the next big time and they both want to contribute to a more open and connected world.
Facebook founder and Chief Executive Mark Zuckerberg said the firm was preparing “for the platforms of tomorrow.” He said mobile phones are in today, but virtual reality is the future. He said Oculus has the ability to change the way people work, play and communicate by creating “the most social platform ever.”
He further said that Facebook and his team members understand the potential for virtual reality and what it can do to the future. Zuckerberg said that virtual reality “will become ubiquitous, affordable, and transformative” in the coming 10 years.
Zuckerberg said that that even though playing virtual games would be the first obvious usage of the goggles, Facebook plans to “make Oculus a platform for many other experiences.” He said that experiences like consulting a doctor face-to-face from the comfort of the home would be possible in the future just by wearing goggles.
Facebook is on the roll. Before the firm’s plans to buy the virtual reality goggles maker Oculus for $2 billion, about a month ago, the social networking site had acquired instant messaging app Whatsapp Inc. for an eyebrow-raising $19 billion. The firm also generated headlines when it had decided to buy photo-sharing app Instagram for $1 billion in 2012. The social networking ended 2013 with $11.45 billion in cash and marketable securities.
By Faryal Najeeb