Facebook Buys Kickstarted VR Company Oculus for $2 billion

Facebook announced today in a press release it would acquire virtual reality company Oculus, maker of the Rift VR headset that drew id Software Co-Founder John Carmack to join Oculus earlier this year.

According to the release, Facebook is paying $400 million in the sale, with 23.1 million shares of Facebook common stock, valued at $1.6 billion. Hitting certain unnamed milestones would earn Oculus another $300 million in cash and stocks, it said.

According to a statement on the Oculus website, the company and Facebook “shared an even deeper vision of creating a new platform for interaction that allows billions of people to connect in a way never before possible.”

“At first glance, it might not seem obvious why Oculus is partnering with Facebook, a company focused on connecting people, investing in internet access for the world and pushing an open computing platform. 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.”

The statement goes on to state that Oculus has received more than 75,000 orders for development kits of its Rift headset (each valued at $300). The Rift project got its major start on Kickstarter in 2012, where it earned just under $2.5 million, with a stated goal of $250,000. It later brought in another $75 million in Series B venture capital funding.

Facebook Chief Executive Officer Mark Zuckerberg posted a statement of his own on the social network, noting that Oculus would “continue to operate independently” within Facebook and would continue to focus on gaming, at least for now.

“Immersive gaming will be the first, and Oculus already has big plans here that won’t be changing and we hope to accelerate,” Zuckerberg wrote. “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.”

Meanwhile, the news of Facebook’s acquisition of the company has spurred at least one well-known game developer to cut loose of working on the Rift. Minecraft creator Markus “Notch” Persson noted on Twitter that he and Minecraft developer Mojang had been in talks with Oculus to bring a version of the super-popular open-world game to the Rift headset.

“I just canceled that deal,” Persson wrote on Twitter. “Facebook creeps me out.”

Notch went on in a blog post, saying that while the future of VR may well be in social, “I don’t want to work with social, I want to work with games.” He also mentioned his own donation to the Rift project on Kickstarter, saying, “And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition.”

“Facebook is not a company of grass-roots tech enthusiasts,” he wrote. “Facebook is not a game tech company. Facebook has a history of caring about building user numbers, and nothing but building user numbers. People have made games for Facebook platforms before, and while it worked great for a while, they were stuck in a very unfortunate position when Facebook eventually changed the platform to better fit the social experience they were trying to build.”

Other developers might not be quite as negative toward the social networking behemoth, as noted in a report from Polygon polling developers making VR games. But like Notch, one has to wonder how the Rift’s 9,521 other Kickstarter backers have to be feeling right now, since they’ll see no return on the money they gave to help make the Rift a reality. Meanwhile, the Facebook sale will bring the company’s creators some 800 times the amount they acquired through crowdfunding.


Phil Hornshaw is senior editor at Game Front. Read more of his work here, and follow him and Game Front on Twitter: @philhornshaw and @gamefrontcom.

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14 Comments on Facebook Buys Kickstarted VR Company Oculus for $2 billion

Mike

On March 25, 2014 at 5:16 pm

This sounds like a bad joke or even worse nightmare. Maybe I am imagining things worse, than they could be, but Facebook inner politics and customer services don’t make me optimistic. It’s like, if group of kids will be playing in sandbox, and then big guy in mixer truck would arrive, said to the kids, that there will be tennis court, and filled the sanbox with concrete.

Ebalosus

On March 25, 2014 at 6:33 pm

What I said on Facebook regarding the acquisition:

https://www.youtube.com/watch?v=A6TmTv6deTI

Replace “EA” with “Facebook” and “Bioware” with “Oculus”, and the message is the same: Oculus does NOT need Facebook in order to succeed, which is why my sympathies lie with the dejected backers and critics of this acquisition.

Red Menace

On March 25, 2014 at 8:55 pm

To be fair, for $2 billion dollars, I’d sell too.

Dan Miller

On March 25, 2014 at 8:57 pm

I was pretty shocked by this. Facebook likely buying a google glass competitor more than anything else – wearable consumer electronics is the hot space right now and Oculus has a ton of momentum.

Probably going to (continue to) degrade the supply of kickstarter capital for game-related projects (the majority of projects). Seems incredibly unethical to me that this management team is selling a kickstarted company…

quicktooth

On March 25, 2014 at 9:31 pm

Good grief it didn’t take them long to sell out. Facebook is a predatory organisation to it’s users. It treats them as dollar bills, pure and simple. It has no security. It sells it’s customers as it’s product. It’s terrifying to think what they could do if VR really catches on (and why won’t it) with *Facebook* calling the shots. Remember, nothing is more immersive than VR, and Facebook has a history of making *manipulative* rather than *fun* “games” to get people to pay them money. See any number of game developer conferences addresses; one (who’s speaker I can’t remember at the moment) expressed disgust at the blatant efforts of the casual “gaming” space to manipulate rather than entertain. An example: people are driven by *guilt* to buy and play more. This involves a player depending on their “friends” for contributions to play, and so to maintain *friendships* the player “must” buy and play more. Deable. This is the infamous “monetisation model as a game idea”. It’s absolutely awful that Facebook, as a company and a games space, should have aquired Oculus. I agree with other commenters here- this is like a bad dream. D@mmit world, we had such a fine company in Oculus, it really really looked like VR was going to work this time. Then corruption and soulless corporations shouldered their way in (yes this is corruption- see in the article all the kickstarter backers being left to twist in the wind). I can only hope some wide-eyed kids do some sort of ‘crowd-started’ project to make a competing product… we have too many manipulating mega-corporations as it is…

quicktooth

On March 25, 2014 at 9:32 pm

wtf Gamefront censors. “D3sp!cable” shouldn’t be edited out?!

MTaur

On March 26, 2014 at 1:08 am

Ugh. Um………. At least it’s not Blizzard?

I’ve got nothing. The future of gaming has officially been delayed by at least 5 years.

monotoy

On March 26, 2014 at 1:56 am

worst news from the gaming sector in a long time :(

lol

On March 26, 2014 at 5:59 am

What is the point of the acquisition?

Most Facebook users are technologically illiterate or are using Facebook on a mobile device. How does the Rift cater to anything that Facebook users would want or need?

James

On March 26, 2014 at 6:19 am

@lol – see, here’s the problem with your childish use of absolutes. “Most Facebook users are technologically illterate”? Prove it. Define what you mean by the term technologically illiterate otherwise what you’re stating has no tangible value. Then, explain why it’s a majority. Not that it matters anyway but you’re clearly obsessed with appealing to an assumed (usually imaginary) majority at all times. Because this just comes across as a snobbish ad hominem rejection of people based on using a social network site.

Also, since we’re on the subject, let’s not forget that you thought EA made the original Mass Effect and Knights of the Old Republic. And these are among many, many brainfarts over the years. You have zero grounds to challenge anyone else’s technical knowledge.

quicktooth

On March 26, 2014 at 7:19 am

@James- whoa whoa whoa there- For once (and I’m as amazed as you are), lol actually has a point. Maybe not on tech literacy or lack thereof in facebook users (though I guess lol is making an inference from facebook games being very shallow). But lol *does* have a point in that facebook users, being casual gamers, are amazingly unlikely to want or need an actual VR headset. And lol’s also right in that the acquisition appears to have no point (the two companies are involved in totally unrelated things). I know it’s amazing that lol isn’t just mindlessly trolling, as they otherwise always are; but give ‘em a chance while they’re on topic, eh?

Ron Whitaker

On March 26, 2014 at 7:39 am

I’d love to say that this is a sign that Facebook is moving away from its earlier practices and moving toward becoming a for real tech company. I would love to say that.

But I can’t. I think this is bad news for Oculus. More to come on that in a bit.

monotoy

On March 26, 2014 at 1:30 pm

meh. @lol @james @quicktooth – FB has *so many* users that I would have to agree with @lol for the first time – seeing it’s probably a fair share of the internet-ized population, and as such a fair share of general demographics, one can assume that the majority is (as the general populace) not overly tech-savvy. However, to claim that this would sort of be a reason for FB not to like to go into VR is silly – if you can provide world & dog a VR experience for porn, shopping, and cheap soaps … just imagine the leverage.

lol

On March 26, 2014 at 10:24 pm

@James

Anyone that has a Rift or was intending to purchase one, could you compare their technical knowledge with an average Facebook user? As I said, MOST users. Not ALL.

Only thing I can predict is it will remain in development for gaming until it is easier to integrate in Facebook.

Were you even around for the Myspace days? My BFF Jill was able to code the out of her page with all the Blingee, music players and without any problem. But ask them to install a mouse driver or install a web camera or clear a web browser’s cookies and cache. Totally different language for them.