Facebook has reached a definitive agreement to acquire immersive virtual reality technology company Oculus VR, for roughly $2 billion. The transaction is expected to close in the second quarter of 2014.

This is huge, and not just because Facebook is getting into hardware. Oculus is working on a totally new (and pretty cool) technology, that lets users experience immersive, interactive content. Lets say you love gaming. Now you can be inside the game, while simultaneously playing it. The headsets Oculus is working on are expected to be affordable, and intended for the mass market. Facebook has 757 million daily active users on average (as of December 2013). Combine the two, and the rate of adoption of virtual reality technology could reach a J-curve really really fast.

Mark Zuckerberg (Founder and CEO, Facebook ): 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.

Facebook says it plans to use Oculus’ immersive virtual reality technology capacities in gaming, which is a no-brainer given the very nature of the technology, but also in communications, media, entertainment, and education, among other areas.  

Brendan Iribe (Co-founder and CEO, Oculus VR): We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways.

The purchase price includes $400 million in cash and 23.1 million shares of Facebook common stock (valued at $1.6 billion based on the average closing price of the 20 trading days preceding March 21, 2014 of $69.35 per share). The agreement also provides for an additional $300 million earn-out in cash and stock based on the achievement of certain milestones.

Oculus will maintain its headquarters in Irvine, CA, and will continue development of the Oculus Rift, its virtual reality platform.

[Image courtesy: Oculus]

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