Facebook has signaled its intent to move into virtual reality, with Mark Zuckerberg making an announcement hours ago to buy virtual reality company Oculus VR for US$2 billion in cash and stock.
This includes US$400 million, and 23.1 million Facebook shares. An additional US$300 million earnout willÂ be paid in cash and stock if Oculus hits certain unspecified milestones.
This is fresh off its earlier announcement of buying WhatsApp for US$19 billion, and its earlier US$1 billion purchase of Instagram. (Read also: Should you be creeped out when Facebook buys WhatsApp?)
For non-gamers, here’s a quick glimpse of how the technology works in this video by Tested.com
Virtual reality vision
Hereâs Zuckerbergâs virtual reality vision for Facebook:
âOur mission is to make the world more open and connectedâ¦We have a lot more to do on mobile, but at this point we feel we’re in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences,â said Mark Zuckerberg in a statement.
âImmersive gaming will be the first, and Oculus already has big plans here that won’t be changing and we hope to accelerate. The Rift is highly anticipated by the gaming community, and there’s a lot of interest from developers in building for this platform. We’re going to focus on helping Oculus build out their product and develop partnerships to support more games. Oculus will continue operating independently within Facebook to achieve this,â added Zuckerberg, going on to talk about how the Oculus platform would give Facebook a platform for many other experiences.
Oculus builds virtual reality technology. Its Oculus Rift headset allows users to have immersive computer-generated experiences.
âImagine 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. This is really a new communication platform,â he said.
âImagine sharing not just moments with your friends online, but entire experiences and adventures,â he said.
“These are just some of the potential uses. By working with developers and partners across the industry, together we can build many more. One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people.
Virtual reality was once the dream of science fiction. But the internet was also once a dream, and so were computers and smartphones. The future is coming and we have a chance to build it together. I can’t wait to start working with the whole team at Oculus to bring this future to the world, and to unlock new worlds for all of us.â
But it looks like Wall Street isnât as excited.Â According to TechCrunch, Facebookâs stock price dropped in after-hours trading after the company made the announcement, and perhaps this could be the reason.
âUnlike mobile, where you can realistically use your phone for hours a day, in any location, for any number of purposes, the eventual utility of virtual reality is bounded by physics, the physiology of your five senses, and the content industry’s inability to generate this kind of content easily. Your Facebook friends certainly won’t be developing virtual reality content anytime soon,â said Forrester analyst James McQuivey.
âIt feels like Facebook executives have sworn to never miss another big shift again. Only unlike mobile, virtual reality will only ever be a niche, even if it eventually becomes a very exciting one,” he added, calling the move “motivated more by fear than good business sense”.
Prantik Mazumdar from social media marketing firm Happy Marketer also said he doubted the social network would be able to monetise the platform in the near future.
This deal seems to be akin to Google’s futuristic investments into thermostats, balloon-wifi systems, wearable computing in that they hope that virtual reality systems will augment social media experiences and take it to the next level in the coming decade,â said Mazumdar. But he added that it would be interesting to see how Facebook integrates the technology.