Facebook on March 25 made a surprise pivot, moving into the virtual reality headset business by buying Oculus VR for about $1.9 billion in cash and common stock.
The Menlo Park, Calif.-based social network agreed to pay $400 million in cash and 23.1 million shares of the company's stock. At the March 25 closing price of $64.89, the stock changing hands in the deal was worth $1.5 billion.
Oculus VR makes the Rift headset for 3D gaming and is based in Irvine, Calif. The company was founded in 2012 by Palmer Luckey, a self-described "virtual reality enthusiast and hardware geek."
Used Kickstarter Campaign to Bank $2.4 Million
Oculus used a Kickstarter campaign to fund development of their first product, which is a ground-breaking virtual reality headset for immersive gaming. Bolstered by the support of video game companies such as Valve, Epic Games and Unity, the Kickstarter was a success, raising more than $2.4 million in funding from project backers and supporters around the world.
The Kickstarter campaign in August 2012 went rather well. Within four hours of the announcement, Oculus reached its goal of $250,000, and in less than two days, it had surpassed $1 million in funding. The campaign eventually ended with $2,437,429 in the bank.
"Our mission is to make the world more open and connected," Facebook CEO Mark Zuckerberg said in a statement to the press. "For the past few years, this has mostly meant building mobile apps that help you share with the people you care about. 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.
'You Feel Like You're in Another Place'
"This is where Oculus comes in. They build virtual reality technology, like the Oculus Rift headset. When you put it on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you're actually present in another place with other people. People who try it say it's different from anything they've ever experienced in their lives."
Zuckerberg said that Oculus will continue to focus on gaming for the time being, and that the company will continue to operate independently. But Facebook also has other plans for Oculus.
"We're going to make Oculus a platform for many other experiences," Zuckerberg said. "Imagine enjoying a courtside 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. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures."
Deal Expected to Close in Q2
The transaction is expected to close next quarter, Facebook said.
Oculus has taken more than 75,000 orders for its virtual reality headset so far. Those headsets have toolkits designed to get developers interested in working with VR technology. The most recent prototype, Crystal Cove, features a full 1080p display and more sensors to detect and position users in virtual environments, the company said.
In addition to the crowdsourcing campaign, the company has received a total of $93.4 million in funding from several venture capital firms.