Facebook to buy virtual reality firm Oculus for $2bn

Social network intends to bring technology to communications, education and entertainment

Facebook is buying virtual reality technology firm Oculus VR in a deal worth about $2 billion.

But the company, which is best known for its virtual reality headset, the Oculus Rift, is expected to continue to develop technology aimed at the games industry, although Facebook plans to bring it to new markets.

The asking price is made up of $400 million in cash and 23.1 million shares of Facebook common stock, which is valued at about $1.6 billion. An additional $300 million earn-out in cash and stock will hinge on the achievement of certain milestones, the social network said in a statement.

Chief executive Mark Zuckerberg said the acquisition came as the company explored new platforms.

“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,” he said in a post on Facebook.

The company said it intends to bring Oculus’s technology, which has been used in gaming, to communications, media, entertainment and education markets, among others. About 75,000 orders have been placed for the development kit to date.

“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,”Mr Zuckerberg said. “But this is just the start. After games, we’re going to make Oculus a platform for many other experiences. 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.”

Oculus chief executive Brendan Iribe said the company was "excited" to work with Facebook.

“We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways,” he said. “It is a transformative and disruptive technology, that enables the world to experience the impossible, and it’s only just the beginning.”

The acquisition follows close behind the announcement of Facebook's intended purchase of messaging service WhatsApp for $19 billion. In 2012, it bought photo sharing platform Instagram in a deal worth up to $1 billion.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist

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