Here's Why Facebook Just Bought the World's Most Advanced Virtual Reality Machine

Future Tense
The Citizen's Guide to the Future
March 25 2014 6:23 PM

Facebook Just Bought the World's Most Advanced Virtual Reality Machine for $2 Billion

Facebook is acquiring Oculus VR, the makers of the immersive virtual reality Oculus Rift headset, for about $2 billion. The deal includes $400 million in cash and 23.1 million shares of Facebook stock, plus the potential for $300 million of additional cash and stock. The deal is expected to close at the end of June.

The Rift, which has been in prototype and developer phases since 2012, is expected to have its commercial release at the end of this year or the beginning of 2015. Virtual reality technology is generally associated with immersive gaming, but independent developers and Oculus VR itself have been working on other possibilities in entertainment and media. And clearly Facebook sees potential for social interactions in virtual reality. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate." Mark Zuckerberg said in a press release.

Oculus will remain in its Irvine, Calif. headquarters and will continue to develop the Oculus Rift, at least for now. It will be interesting to see how Facebook integrates the product, since it has not evolved internally the way Morpheus, for example, seems like a logical next step into virtual reality for Sony's development of the gaming platform PlayStation.

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It may seem like Oculus VR doesn't fit into any of Facebook's existing products, but if you look at Facebook in terms of gaming—virtual reality's biggest and most obvious strength right now—you can see where Facebook may be going with this. In its early years, the company relied on the social gaming platform Zynga for a lot of its revenue, and games like Farmville took off on Facebook. But gaming declined for Facebook as a moneymaker, and technology from Oculus could be a way to bring it back. And it could emerge even stronger if Facebook used the device as the portal to a world where a user's Facebook account was the backbone of their gaming identity. Facebook could also gain a huge amount of valuable data on users' gaming preferences, evolving tastes, and preferred modes of interaction within games to help the company sell ads and services. The network would be like a more powerful version of Apple's Game Center.

The Oculus team wrote in a blog post that, "Facebook understands the potential for VR. Mark and his team share our vision for virtual reality’s potential to transform the way we learn, share, play, and communicate." Oculus has a head start on basically everyone when it comes to virtual reality tech, so if nothing else, maybe Facebook is just buying it so no one else will. And at $2 billion it's a total steal compared to WhatsApp. Those impulse items near the register are hard to resist.

Future Tense is a partnership of SlateNew America, and Arizona State University.

Lily Hay Newman is lead blogger for Future Tense.

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