By Tom Cheshire,
Facebook wants to own every aspect of human communication, whether through the web or mobile apps like WhatsApp and Instagram, Happy days: now you can actually strap Facebook to your face.
The social networking giant has bought virtual reality headset maker Oculus for $2bn (£1.2bn). Oculus’ rise has been quick – from a wildly successful Kickstarter campaign in September 2012 that raised 10 times its asking price, through to a $75m (£45.4m) round of investment as recently as December last year.
On the face of it, the two companies couldn’t be more different. The Oculus Rift headset is all about ultra-immersive, hardcore videogaming (it’s one of those things you just have to try to see how good it is – and it really is good) and is still in the development phase.
It hasn’t sold a single kit to consumers.
Facebook is used for casual social interaction and holiday boasting – and the company’s acquisitions have been in software, in businesses with hundreds of millions of users such as WhatsApp and Instagram.
Oculus is Facebook’s bet on the future – and it’s clear the company sees it as more than a gaming device.
In the press release announcing the deal, Mark Zuckerberg said: “Oculus has the chance to create the most social platform ever.” Cue images of a terrifying Zuckertopia where you spend days grudgingly liking your friends’ lunch photos in a high-definition, ultra-immersive version of Second Life.
But the CEO also imagined some more useful applications such as chatting in person with your doctor, attending an online class, or watching a virtual sports game with friends. Developers have already shown real-world use cases: teams of architects can use it to walk through their virtual renderings and collaborate on plans, for example. Teachers in Australia are already using the kit to help autistic children learn.
Facebook is looking to expand its communication empire
In these respects, the Oculus acquisition isn’t dissimilar from the recent purchase of WhatsApp.
Facebook wants to own every aspect of human communication, whether that’s through the web browser on facebook.com or mobile apps like WhatsApp and Instagram.
The company has also started offering free video calls. It wants to own what Silicon Valley types call the whole “stack”, whether it’s explicitly Facebook-branded or not. So if people are going to communicate using kits like the Oculus Rift, Facebook wants to mediate that experience. And then use it to sell ads.
It also means that Google is not the only Silicon Valley company to have some exceptionally geeky eyewear.
Tech giants including Apple and Yahoo! are battling to acquire new startups and technologies, and so are driving valuations up.
Two billion dollars is loose change for Facebook, especially since the company will pay only $300m (£181.3m) in cash – the rest will be paid in Facebook shares.
With London-based games developer King.com floating on the New York Stock Exchange at a valuation of $7bn (£4.2bn), some are smugly saying we’re in a new tech bubble. We’re not – at least not yet.
Valuations are definitely high, but the real test point will come with Chinese web company Alibaba’s upcoming IPO – potentially the biggest technology flotation of all time.