Real Reality: Facebook Makes Another Massive Purchase. Is Virtual Reality Firm Oculus VR Worth It?

11Apr, 2014

Social media heavyweight Facebook has been all over the news lately – including for its newsfeed – and here at the official blog of Fang Digital Marketing, we’ve been keeping a close eye on all of it. Especially the big-time, multi-million and -billion-dollar mergers and acquisitions.

Now, mere weeks after purchasing chat application WhatsApp for a mind-boggling $19 billion, Facebook has struck another massive deal, this one to acquire virtual reality firm Oculus VR for $2 billion.

oculus-3d

 

Oculus VR‘s claim to fame? The Irvine, California-based company makes the Oculus Rift VR headset, which covers its user’s eyes and immerses them in a virtual environment that responds to their head movements.

Or, in the words of Oculus VR themselves (per their website):

“The Oculus Rift is a new virtual reality headset that lets players step inside their favorite games and virtual worlds. The Rift uses custom tracking technology to provide ultra-low latency 360-degree head tracking, allowing you to seamlessly look around the virtual world just as you would in real life. Every subtle movement of your head is tracked in real time, creating a natural and intuitive experience.”

 

None of this ringing a bell? Well, if you haven’t heard of the Oculus Rift, don’t worry. There’s a good reason.

It’s not yet available for purchase to the general public.

There’s no real read on just when the Oculus Rift will be available to consumers, either. And Facebook co-founder and CEO Mark Zuckerberg didn’t exactly shed any light on that situation.

Maybe Zuckerberg was wearing an Oculus Rift headset when he made the following statement. That would at least partially explain that lack of light.

“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” said Zuckerberg on a conference call with analysts regarding the purchase. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

 

From this perspective, you can see why Zuckerberg and his Facebook friends decided to shell out a cool $2 billion for Oculus VR and the Oculus Rift headset – even though Zuckerberg insisted that Facebook is not “going to try to make a profit off the devices long term.”

For its part, Oculus VR posted its own blog on the sale. The post read, in part:

“At first glance, it might not seem obvious why Oculus is partnering with Facebook. But when you consider it more carefully, we’re culturally aligned with a focus on innovating and hiring the best and brightest; we believe communication drives new platforms; we want to contribute to a more open, connected world; and we both see virtual reality as the next step.”

 

There’s also a bit of a catch in the reported value of this transaction. According to published reports, that $2 billion total is made up mostly of Facebook stock – as in $1.6 billion in Facebook stock and $400 million in cash.

twoEither way, it’s a big-time purchase. Which seems to be more and more of a regular occurrence in the big-time world of Facebook. But will all of us Facebook users and observers continue to get notifications of such blockbuster deals?

Yet another recent acquisition, this one of CPA Network MaxBounty for a reported $550 million, suggests as much.

But not so fast, said Zuckerberg. There is a limit to friend requests, after all. Especially when it comes to high-profile friends.

 

“The theory for WhatsApp…is that they’re on a path to have a billion people using their product in the near future, and there just are not that many services in the world that can reach a billion people,” Zuckerberg told analysts. “Similarly, with Oculus, there are not that many companies that are building core technology that can be the next major computing platform.”

Whether or not virtual reality becomes “the next step,” in Oculus’ own words, or “the next major computing platform,” as Zuckerberg envisions it, remains to be seen – with or without an Oculus Rift headset on.

 

three

From our perspective, it’s not too difficult to envision a near-future where devices like Oculus Rift headsets and Google Glass are as commonplace and cool as hipster eyeglasses and colored contacts are today. Sure, we’ve all heard the story of a Virtual Reality Future time and time again, from films like “The Lawnmower Man” and “Virtuosity” to once-white-hot social platforms like Second Life (whose co-founder, Cory Ondrejka, is currently a VP of Engineering at Facebook, and was reportedly involved in the closing of this deal).

Despite some of these fantasies, teases and “false starts,” it’s all probably bound to exist as more of a hard-core reality than a half-baked fantasy at some point. In other words, there will likely come a day when virtual reality isn’t really that virtual anymore.

What do YOU think? Will Facebook’s hefty purchase of Oculus VR and its Oculus Rift headset technology prove to be a sort of prophetic bargain? Or will history look back at the move as an arrogant misstep by an over-ambitious social media monolith? Or somewhere in between?

Let us know your thoughts in the comments section below this blog post. We’d love to hear from you on this one.

Really.

 

NOTE: Shortly after we originally published this post, more details emerged about the behind-the-scenes orchestration of this deal between Zuckerberg’s Facebook team and Oculus VR CEO Brendan Iribe’s operation. CNN Money/Fortune published a nice inside account of the transaction here.

Leave a Comment