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Oculus, Facebook weigh in on $2 billion surprise VR deal

Facebook co-founder Mark Zuckerberg and Oculus VR co-founder Brendan Iribe paint an enticing picture of the potential of VR post-$2b acquisition, but important questions remain.

Christian Nutt, Contributor

March 25, 2014

5 Min Read

In a call with investors today following the news that the company has put in motion plans to acquire Oculus VR for $2 billion, Facebook co-founder and CEO Mark Zuckerberg promised that the VR company's immediate plans will not change. When it comes to VR, "immersive gaming is the first big opportunity, and Oculus has big plans here that will not be changing," Zuckerberg promised. Moreover, he said, Oculus will continue to operate as an independent company under Facebook -- just with increased financial muscle. Still, there are important facts that came from the call, and questions that arose -- you can find them below.

Why Buy Oculus?

Why did the company acquire Oculus? Facebook sees VR as "the next major computing platform that will come after mobile." Acquiring Oculus is "a long-term bet on the future of computing." "Immersive virtual and augmented reality will become a part of people's everyday life," Zuckerberg said. "History suggests there will be more platforms to come, and whoever builds and defines these," he said, will shape the future and reap the benefits. "After games, we'll make Oculus a platform," the Facebook CEO vowed. "It's different from anything I have ever experienced in my life," Zuckerberg said, and allows for "completely new kinds of experiences." He alluded to "a real breadth of interesting things we just haven't seen before," which he likened to how smartphones have given birth to entirely new applications that would not have appeared in the PC ecosystem.

Oculus' Take

For his part, in a Reddit post, Oculus co-founder Palmer Luckey wrote that he was "skeptical" of partnering with Facebook but that it became "the clear and obvious path to delivering virtual reality to everyone." "This is a special moment for the gaming industry -- Oculus’ somewhat unpredictable future just became crystal clear: virtual reality is coming, and it’s going to change the way we play games forever," Luckey wrote. "We're really looking forward to working together to create the best virtual reality platform in the world," said Brendan Iribe, Oculus VR co-founder and CEO, who took part in the call with Zuckerberg. He described the company's mission as "making incredible, affordable, and ubiquitous virtual reality available to the world," and suggested that Facebook was the natural partner for this. Oculus, he said, is "teaming up with Facebook to invent the future." "We started in gaming, and that's obviously where Oculus got its kickoff," Iribe said. "We had this vision where it could go with immersive gaming and, long-term, entertainment." Facebook CFO David Ebersman said that Facebook's interest in Oculus is "including and beyond games." Iribe said that while games began the Oculus project, "something we didn't expect" happened. As development on the project continued, it "became really obvious" how big of a potential there is for a world-changing social experience. "You're actually present in another space. Your brain is completely convinced it's present and you are okay. Something fundamental changes... if you can see somebody else, and your brain believes they are right in front of you, you get goosebumps. You really start to realize how big this can be -- and social and communications, how big of an impact it can have on these industries," said Iribe.

Sony as Competition, and the Hardware Question

But what of Sony's recently-announced Project Morpheus PS4 headset, or the potential for Microsoft to jump into the space? Facebook's goal is to "have this transcend the traditional console opportunity. To really make it more of an ubiquitous computing platform." Zuckerberg doesn't believe either of those companies can do that, he said. He was dismissive of the competition, in fact. Notably, said Zuckerberg, Facebook is "clearly not a hardware company" and is "not going to try and make profits off hardware long term," with Oculus. What that means for the device's ultimate consumer launch is unclear. Zuckerberg would not address launch timing. No further details were discussed. Still, Zuckerberg promised to push "the different levers that Facebook has to make the product available to be people, affordable, and ubiquitous." Given Facebook's business model, Zuckerberg sees a "software and services" future for the Oculus technology -- including somehow generating virtual goods and advertising revenue, though he did caution that it's too early to discuss this in any detail.

Betting on the Future

The matchup will "accelerate virtual reality's future," said Iribe. Pairing with Facebook will open doors for the company, while allowing Oculus to concentrate on "doing what we do best: solving hard problems and creating the future of VR." Zuckerberg clearly sees virtual reality not just as a game platform or a basic technology, but has invested in it the potential to fundamentally shift things the way that the popularization of smartphones has. He sees it as a new frontier in computing and a new pillar for technology alongside PCs and phones. To that end, his company decided to acquire the leader -- and its talent, he was very definite about pointing out. "There are not that many companies that are building core technology that could be the next computing platform, and Oculus is the clear leader here. It's so much better than anything anyone has built before," Zuckerberg said. "If we want to help push this forward, this is the team, and they are years ahead," said Zuckerberg. Now, said Ebersman, comes the challenge of "making these services relevant for millions of people." Zuckerberg compared VR's potential to the 10-year journey smartphones took from 2003 to 2013 -- from their first blush of popularity through to their ubiquity. He repeatedly said that the acquisition of Oculus is a long-term bet on the future of computing.

That's All... For Now

So far, this is all the communication we are able to get or foresee getting in the immediate future. Oculus directed Gamasutra's interview request to Facebook, and Facebook said that this investor call would be the only public communication on the acquisition beyond its original announcement and PR communication. There are important questions still looming over this move, and Gamasutra will bring you more as soon as it is possible.

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