How will Facebook benefit from its Oculus acquisition?

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Facebook acquires virtual reality company Oculus VR for $2 billion (Part 2 of 5)

(Continued from Part 1)

Facebook is acquiring big companies to compete in the social media space

In the previous article of this series, we discussed the valuation details of Facebook’s (FB) Oculus acquisition and how Facebook’s team approached the Oculus team to understand the product. We also discussed how Facebook is acquiring big companies like WhatsApp to compete effectively in the social media space against companies such as LinkedIn (LNKD), Twitter (TWTR), Google (GOOG), and Microsoft (MSFT). As per the below graph, by the end of the fourth year, WhatsApp had 419 million monthly active users, compared to only 145 million for Facebook, only 123 million for Google’s Gmail, only 54 million for Twitter, and only 52 million for Microsoft’s Skype. Here we’ll discuss what the Oculus acquisition brings to the table for Facebook.

Oculus technology could be disruptive

Facebook founder and CEO Mark Zuckerberg commented, “Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow. Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

Brendan Iribe, co-founder and CEO of Oculus VR, commented, “We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology, that enables the world to experience the impossible, and it’s only just the beginning.”

Facebook plans to leverage Oculus’ technology beyond gaming

According to a press release from Facebook, the company plans to expand the Oculus Rift headset’s applications beyond gaming to broader fields such as media, entertainment, communications, and education. Management stated, “Oculus is the leader in immersive virtual reality technology and has already built strong interest among developers, having received more than 75,000 orders for development kits for the company’s virtual reality headset, the Oculus Rift. While the applications for virtual reality technology beyond gaming are in their nascent stages, several industries are already experimenting with the technology, and Facebook plans to extend Oculus’ existing advantage in gaming to new verticals, including communications, media and entertainment, education and other areas. Given these broad potential applications, virtual reality technology is a strong candidate to emerge as the next social and communications platform.”

Continue to Part 3

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