Facebook wants to create the platform of the future. That meant exploring the realms of virtual reality.
A few months ago, Mark Zuckerberg visited the humble office of Oculus in California. The Facebook founder knew that something huge is coming. He also knew that Oculus, the virtual reality technology company, will play a significant role to his vision of the future.
The 29-year old Zuckerberg already conquered the social networking space. Now he wants to push himself even further. By acquiring the Oculus, Zuckerberg will be able to expand Facebook to untraversed areas such as gaming, entertainment, education, and medicine.
“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” Zuckerberg said. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”
Facebook agreed to buy Oculus VR, Inc. for $2 billion. According to company's official statement, the $2 billion deal includes $400 million in cash and 23.1 million shares of Facebook common stock, valued at $1.6 billion based on average closing price of $69.35 per share. Oculus is also entitled to an additional $300 million "earnout," a pricing structure where sellers can earn a portion of the purchase price based on key performance indicators.
The deal is expected to close in the second quarter this year.
Facebook said that it plans to extend Oculus' edge in gaming to new heights. In a post on Facebook, Zuckerberg shared some of his plans.
"Immersive gaming will be the first," writes Zuckerberg. "We're going to focus on helping Oculus build out their product and develop partnerships to support more games."
But that's only the beginning. Oculus will soon include many other experiences.
"Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home," Zuckerberg added.
Meanwhile, Oculus founder Palmer Luckey admitted that he was skeptical about the deal at first.
"When Facebook first approached us about partnering, I was skeptical," Luckey wrote in a blog post. "As I learned more about the company and its vision and spoke with Mark, the partnership not only made sense, but became the clear and obvious path to delivering virtual reality to everyone."
Luckey could be right. The deal will not only secure the future of Oculus, but it will also accelerate its growth.
"It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content, and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR," the company said in a statement.
Oculus CEO Brendan Iribe confirmed that the company will continue to operate independently. Iribe also detailed Oculus' long term strategy. That includes investing in partnerships to create the best product and platform and tapping into Facebook’s experience and backend systems.
"This is a truly special moment. The work we’ve done has captured the world’s attention and changed the perception of the medium forever. This partnership is a huge affirmation of everything we’ve done," Iribe said.