Such a compelling experience explains why Oculus Rift, the company’s virtual-reality headset, has captivated keen gamers. It has also caught the attention of Facebook, which announced on March 25th that it had bought Oculus VR for around $2 billion. This deal, which comprises $400m in cash and the rest in Facebook stock, comes not long after the social network’s purchase of WhatsApp, a messaging app, for $19 billion.
WhatsApp at least has more than 450m users. Oculus VR, a startup that is less than two years old, has so far only sold its headsets to game developers. So why is Facebook paying so much for it? And why is it betting on a much-hyped technology that has so far failed to live up to its promise?
Part of the answer is that Mark Zuckerberg, Facebook’s boss, and his colleagues think advances in areas such as graphics processing power and thin, high-resolution screens mean that virtual-reality headsets are at last ready for mass consumption. David Ebersman, the firm’s finance chief, reckons the potential to mint money in gaming alone justifies Oculus’s price tag. Other firms spy the same opportunity. Sony recently unveiled a prototype virtual-reality headset for its PlayStation 4 game console and Microsoft is rumoured to be developing one for its Xbox console.
But some gaming veterans reckon the headsets will appeal only to hard-core gamers. And Facebook’s purchase of Oculus has infuriated some of those. After the deal was announced, Markus Persson, a prominent game developer, tweeted that he had just cancelled a plan to bring a game to Oculus. “Facebook creeps me out,” he added.
That is unlikely to bother the social network, whose decision to buy Oculus was also motivated by a broader strategic concern. Facebook grew up in an era dominated by personal computers. It failed miserably to spot that computing was shifting fast to new mobile “platforms” such as smartphones. It has since raced to catch up in the world of apps and is now keen not to miss the next generation of big platforms.
Mr Zuckerberg thinks virtual reality could be one of these and foresees people putting on Oculus’s goggles in their homes to, say, attend virtual classes or see their doctors. But experiments in marrying entertainment with headgear, like 3D televisions that require viewers to wear special glasses, have been disappointing. . “Two billion dollars seems like a significant amount of money to pay for something that has yet to emerge,” says Brian Wieser of Pivotal, a research firm.
True, but unlike Google, which spends lots of money on futuristic projects in its secretive “Google X” lab, Facebook is willing to let startups try riskier stuff, and then pay princely sums to acquire them. Other firms have also been buying talent and technology: according to Thomson Reuters, an information provider, the Oculus purchase took the total spent on technology M&A worldwide since the start of 2014 to $65.2 billion—the highest amount for the equivalent period since 2000.
The Oculus deal also represents a twist in the tech industry’s very own Game of Thrones, an epic of incessant plotting and warfare. Google wants its Glass smart specs to be a new mass-computing platform and this week said Luxottica, a seller of high-end eyewear, would help it make them look nicer. Google’s vision of the future involves complementing the real world seen through its specs with a visual feed from its search engine and other services. Facebook’s is of people immersed in lifelike digital worlds. Their rivalry should be a real spectacle.
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