I was just about to log out for the night when I saw this little gem cross my monitor, and it’s simply too stunning to let sit until tomorrow:
Oculus VR, makers of the Oculus Rift virtual reality headset, was bought out by Facebook for $2 billion.
Let that simmer for a bit, then click past the jump for details and reaction.
According to the press release, the deal was for $400M in cash and 23.1M shares of common stock, with an additional $300M in cash available in incentive payouts. The Oculus VR team will remain in their current Irvine headquarters rather than moving up north. The Oculus team was initially funded via a successful Kickstarter campaign which solicited donations exceeding $2M from hopeful fans. Less than two years later, they parlayed that into $2 billion. Two thousand millions.
I can’t even fathom bank account balances that large. In fact, that number is so big, I’m having a bit of a hard time moving past that point because IT’S TWO FREAKING BILLION DOLLARS BIG!
Sorry. Small stream-of-consciousness moment there. In those moments when I am able to steer my thoughts back towards the story, though, I can’t help but wonder why Facebook pulled the trigger on this, and why they paid so much for a goofy little VR headset (which I adore, BTW, and am eagerly looking forward to using with Star Citizen). Both Oculus VR and Facebook offered posts on the matter, with Zuckerberg stating, “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.” That’s all well and good, but it still leaves me unclear as to what this has to do with Facebook and it’s future success, and casts doubt on the success and quality of the Oculus Rift.
While it may seem contradictory to say that a product just bought for ten figures would suffer in quality, keep in mind that those funds aren’t an infusion of capital into R&D for that product, but rather the purchase price for the company that owned it. Who knows how many resources will now be devoted to R&D. Plus, Facebook’s forte to date is social networking, not VR development (or even successful business development, for that matter). We’ve received no word that the Oculus VR staff is being let go or switched out so it’s reasonable to presume that the same expertise that was present on the development team is still present (minus that of its late progenitor, may he RIP), but how motivated will that team be after getting such a huge payday?
Then there’s the Kickstarters and general fans of the product. They’re…uh…not happy. Reactions in the comments of the Oculus VR announcement are ranging from, “Boycott,” to, “DO NOT WANT,” to, “Not happy about this at all.” In fact, a friend of mine probably put it most eloquently and succinctly when he simply exclaimed, “@”@$*%#”
Yes, that’s a direct quote. No, my friend isn’t Q*Bert.
The most perplexing response I’ve seen in the comments, however, comes from one Caleb Benningfield who says, “Good job pulling one over on us Oculus. All that talk about revolutionizing things and it was just to build up value for an acquisition.” Well, Caleb, let me ask you this – do you really think Oculus VR was just sitting on their hands? Do you think they were sitting idly, making as cheap a product as possible just in hopes to get bought out? Do you think they believed they were worth $2 billion three months ago? There’s no way. In fact, I think the conversation probably went something like this:
Mark: Hi, we at Facebook love your product and think it would change the world. We’d like to buy it for $2 billion.
Oculus VR: Um, why so mu…<insert kick to the shin here> …I mean, sure, that sounds great!
And that’s actually my biggest concern. Eighty percent of the purchase was paid for in stock, and I fail to see how Facebook is going to generate any significant return on investment from the deal. I have to think Facebook investors will be similarly skeptical which *could* trigger a price drop if the large investment firms initiate a sell-off, which could then perpetuate a chain reaction ending with the scraping of the Oculus Rift project.
And wouldn’t that just be a kick in the kickstarter?
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