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Facebook to acquire Oculus VR for $2 billion

Samit Sarkar (he/him) is Polygon’s deputy managing editor. He has more than 15 years of experience covering video games, movies, television, and technology.

Facebook is acquiring Oculus VR for $2 billion, including $400 million in cash and 23.1 million shares of stock valued at a total of $1.6 billion, Facebook announced today.

According to a press release from Facebook, the company plans to expand the Oculus Rift headset's applications beyond gaming to broader fields such as media, entertainment, communications and education. At the same time, Facebook wants to "accelerate" the company's growth in the gaming space. The deal is expected to close during the second quarter of 2014.

"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," said Mark Zuckerberg, founder and CEO of Facebook, in the press release. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."

This is Facebook's second multibillion-dollar acquisition in as many months. In February, the company announced it had purchased messaging provider WhatsApp for $16 billion.

"Oculus has the chance to create the most social platform ever"

"We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology, that enables the world to experience the impossible, and it's only just the beginning," said Brendan Iribe, co-founder and CEO of Oculus.

The agreement provides for an additional $300 million payout in cash and stock if Oculus achieves certain milestones. Oculus will stay at its existing Irvine, Calif., headquarters; chief technology officer John Carmack heads up the company's Dallas branch, and a third office is set to open in San Francisco soon.

Palmer Luckey founded Oculus in July 2012, and the company launched a Kickstarter campaign for the Oculus Rift that summer, raising more than $2.4 million. Oculus also secured angel and venture capital investments of $16 million in June 2013 and $75 million in December 2013 from Spark Capital, Matrix Partners, Formation 8 and Andreessen Horowitz.

the Oculus VR team

According to a blog post from the Oculus team, the company first met with Facebook "a few months ago" to "discuss how we could work together to bring our vision to millions of people." The officials went on to list some important similarities between the two companies: "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."

In addition, said Oculus, the Facebook acquisition comes with major benefits for the team that will ultimately lead to a better virtual reality product and platform.

"it gives us the best shot at truly changing the world"

"It gives us the best shot at truly changing the world. It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR," said Oculus.

Zuckerberg said in a statement on his personal Facebook page that Oculus' gaming plans for the Rift "won't be changing" as a result of the purchase by his company.

"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," said Zuckerberg.

He went on to provide examples of potential non-gaming applications for virtual reality, which would come "after games," he said. "Imagine 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," he continued.

"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," said Zuckerberg. "One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people."

"Today's acquisition is a long-term bet on the future of computing"

The latest version of the Oculus Rift developer kit is now available for pre-order for $350, and Oculus expects to start shipping units in July. Sony revealed a competing virtual headset, Project Morpheus, during the 2014 Game Developers Conference; Oculus' vice president of product, Nate Mitchell, told Polygon that it's in the company's best interests for Sony to put out a high-quality headset. For more on Project Morpheus, check out our impressions from GDC, along with our thoughts on Sony's position as a new entrant into the virtual reality space as well as all the virtual reality news from the show.

In an investor call this afternoon following the announcement, Zuckerberg noted that most of his company's recent work has been targeted toward making Facebook available everywhere through mobile apps. He indicated that Facebook is satisfied with that progress, and ready to shift focus.

"We feel strong enough in our position that we want to focus strategically on building the next big platform that will be coming after mobile," said Zuckerberg. "Today's acquisition is a long-term bet on the future of computing. I bet Oculus can be one of the biggest platforms of the future."

During the call, Oculus CEO Iribe added, "Today's announcement is about bringing even greater energy and resources to our work so that we're in an even better position to deliver our platform to more people."

Asked about a release date and sales plans for the consumer version of the Rift, Zuckerberg declined comment except to point out that Oculus is currently selling developer kits.

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