Facebook announced Tuesday that it acquired Oculus VR, the company behind the Oculus Rift gaming headset in a cash and stock deal valued at $2 billion.
The terms of the deal include $400 million in cash and 23.1 million shares of Facebook common stock.
The Oculus Rift project gained prominence on Kickstarter, raising over $2 million in the summer of 2012. The company went on to raise more than $91 million in venture funding in 2013. With this exit, the Oculus Rift is easily the most successful Kickstarter project of all time.
"Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate," Facebook CEO Mark Zuckerberg said in a statement.
Although the Oculus team was never committed to bringing a consumer version of its VR headset to the market, more than 75,000 developers had already ordered developer kits for the technology — and the early prototypes we've seen look amazing.
Facebook says that Oculus will remain headquartered in Irvine and will continue developing the Oculus Rift platform.
This is Facebook's second major acquisition in less than two months. Last month, Facebook acquired WhatsApp for a staggering $16 billion.
On an investor conference Tuesday evening, Facebook CEO Mark Zuckerberg discussed why he was so interested in the Oculus team and the Oculus Rift.
For Zuckerberg, it's all about the future. If mobile is the current computing platform, vision and virtual reality could be platforms of the future. Zuckerberg described buying Oculus as "a longterm bet on the future of computing."
This is a sentiment echoed by Chris Dixon, an investor at Andresseen Horowitz, the company that led Oculus VR's $75 million Series B funding round. On his blog, Dixon described his research into virtual reality and Oculus as a company. He writes, "the more we learned, the more we became convinced that virtual reality would become central to the next great wave of computing."
The idea that Oculus represents the future of computing isn't relegated to just investors. Shane Hudson, a London-based web developer, says he thinks that Oculus has the ability to offer up a " fully immersed experience." Hudson thinks that experience could extend from tasks such as "playing a game, watching a film, reading a book or even chatting your friends 'face-to-face' despite being on the other side of the world."
Hudson works with data visualizations and he sees the Oculus Rift as giving an entire new way of working with that kind of data. "It's a very interesting technology that could go in any number of directions, much as the web did," Hudson says.
That's what Zuckerberg thinks too. He sees Oculus's current focus around games and entertainment as just the beginning. "Oculus has the potential to be the most social platform ever," he said. "Imagine not just sharing moments with your friends online but entire experiences."
Zuckerberg also said that buying Oculus was a way of investing in the best and brightest players in computing. He said Oculus is "years ahead in terms of technology" but that "all the best and brightest in the space already work there."
Over the last two years, the Oculus team has amassed tons of talent, including many of the best minds in virtual reality and in gaming. John Carmack, the co-founder of id Software — and the lead programmer of Wolfenstein 3D, Doom and Quake, joined Oculus in Aug. 2012 as its CTO.
Original Oculus Rift founder and designer Palmer Luckey was just 19 when he came up with the first prototype for the Oculus Rift. Luckey worked at USC's Institute for Creative Technologies in the Mixed Reality lab, contributing to research and development of virtual reality systems. A head-mounted display aficionado, Luckey's original Oculus Rift prototype caught the attention of Carmack, who was doing his own research in VR.
The other Oclulus VR co-founders, Brendan Iribe and Michael Antonov, previously founded Scaleform, a vector 3D rendering engine acquired by Autodesk in 2011. Iribe, Oculus VR's CEO, almost passed on Oclus, before seeing the technology.
"I said, 'Virtual reality never works—I'm not interested," Iribe told Fast Company. After meeting with Luckey and seeing the demonstration, he had a change of heart. "It was probably one of the most powerful moments of my life. Right away, I knew it was gonna change the world, and I wanted to be a part of it."
After a successful Kickstarter run and a round of funding, the Oculus team quickly amassed talent from across disciplines. The Oculus team is brimming with experience in the game industry and in virtual reality, ranging from commercial applications to flight simulators for the Navy and NASA.
On the call, Iribe said that he and the Oculus team are thrilled to be "building the future with Facebook."
Moreover, Iribe says that he's excited about "bringing even greater resources to our work." Competition in the VR space is just beginning — with Sony's Morpheus headset already turning heads (pun intended) and other players expected to enter the space in the next year. With Facebook, Oculus now has a parent company with immense resources and a CEO dedicated to helping accelerate its visions for computing of the future.
Of course, not everyone sees a Facebook-owned Oculus VR as an appealing future. Markus Persson, creator of Minecraft and known online as Notch, is disappointed with the development. Persson shares his thoughts on his blog, revealing that the Facebook deal will put an end to plans for an official Minecraft port for the Oculus VR.
Similar sentiment is cropping up from other game developers. Of course, Facebook has faced this kind of backlash before. After Facebook announced it was going to purchase Instagram, users threatened to leave the service en masse. Not only did users not leave, two years later, Instagram is more popular and more successful than ever before.
Zuckerberg is clearly hoping the same situation will take place with Oculus VR. For him, a little backlash is nothing in exchange for, what he describes in his words, as a "longterm bet that immersive VR is the future."
IMAGE: ROBYN BECK/AFP/GETTY IMAGES