In a Tuesday afternoon shocker, Facebook announced it is buying hot virtual reality gaming company Oculus VR for $2 billion. That includes $400 million in cash and 23.1 million shares of Facebook stock. There’s also an additional $300 million potential earn-out in cash and stock based on “the achievement of certain milestones.”
Fresh off Facebook’s $19 billion purchase of WhatsApp, CEO Mark Zuckerberg is showing the world that he isn’t afraid to use his company’s skyrocketing share price to get an edge in Silicon Valley. Facebook stock is up over 150% in the last year and both the WhatsApp and Oculus deals took advantage of that with large stock-cash splits.
"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," Zuckerberg said in a statement. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."
— Steven Bertoni (@StevenBertoni) March 25, 2014
Oculus’ virtual reality headset Rift set the gaming world on fire with its potential, even as it still hasn’t made it to the mass market yet. The second Oculus Rift development kit is available to pre-order for $350. It is unclear exactly how Zuckerberg sees virtual reality fitting in with social media, or if gaming is even his primary focus with this purchase.
Watch Forbes’ JJ Colao experience the power of the Oculus Rift at this year’s South By Southwest:
In a Facebook post about the deal , Zuckerberg said Oculus “is really a new communication platform.”
“After games, we’re going to make Oculus a platform for many other experiences,” he wrote. “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 says FB won’t try to make a profit off selling Occulus hardware, notes FB’s strong suit is communications & software.
— Jeff Bercovici (@jeffbercovici) March 25, 2014
"We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world," Oculus CEO Brendan Iribe said in a statement. "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."
Forbes’ 30 Under 30 list in January profiled 21-year-old Oculus co-founder Palmer Luckey . Watch his video interview with Forbes editor Michael Noer:
Facebook stock dropped 1% in after hours trading.
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