$2 billion in cash and stock; file this under: we did not see this coming.  GfxSpeak believes the deal could open up opportunities for VR as a visualization platform.

There was a certain amount of good will and jubilation in the halls of Nvidia’s GTC (GPU Technology Conference) as the word spread that Facebook announced plans to acquire Oculus VR. CEO Brendan Iribe and chief software architect Michael Antonov were well known in the gamer community for their previous companies Scaleform, which was sold to Autodesk and Gaikai gaming network which was acquired by Sony.  Oculus CTO John Carmack is a well known and well- liked character in the industry. And, several Valve employees had wandered over to Oculus including Atman Binstock, former lead engineer for Valve’s VR work who just became chief architect at Oculus. Seems they made the move just in time. Along with goodwill, there was also plenty of astonishment that the company had sold for $2 billion.

Oculus VR had been a new technology presenter at Nvidia’s technology conference which focuses primarily on HPC applications for computing including visualization.

Why the astonishment?

Oculus VR’s product, the Oculus Rift was clearly still a work in progress. The bulky headset has not achieved acceptable levels of frame-rate. It’s tethered. And, time and time again committed 3D gamers have rejected headsets. In fact, they don’t even like 3D glasses.

Still, there are people for whom immersive 3D is an enchanted land. Oculus’ founder and serious envangelist Palmer Luckey is a VR enthusiast who claims to own more VR headsets than anyone else and the Oculus team have always said there are markets beyond games. At Siggraph last year, Luckey talked about a virtual movie theater experience. Just as you go to a movie with people and you are aware of their presence – you are primarily watching the movie. In the theater you and your friends are alone together. That experience could be recreated in a headset, linked over the Internet, right? So in addition to gaming together people could explore 3D worlds, or investigate a design. At least they could assuming all the challenges of streaming, latency, etc. were worked out. And, let’s admit, sooner or later those problems will be ironed out.

Mark Zuckerberg has taken the long view as only a guy holding on to a considerable chunk of the universe’s money can take the long view. He believes Oculus and VR could be the next leap for social networks. “Imagine sharing not just moments with your friends online, but entire experiences and adventures,” he said on a call to analysts explaining the deal. “We think vision is going to be the next really big platform.”

And, in his post on Facebook, Zuckerberg did his best to sound practical about the acquisition: “Virtual reality was once the dream of science fiction. But the Internet was also once a dream, and so were computers and smartphones.”

Oculus has had plenty of converts too. The company started out with a modest Kickstarter goal of $250K and enthusiastic punters blew it out helping the company raise $2.4 million on the promise of being the first on their block to own an Oculus headset. The company went on to raise over $91 million, $75 million of it from Andreessen Horowitz. The company has sold over 75,000 developer kits and there are quite a few games to play including Game of Thrones, Half Life, and Team Fortress. Oculus’ RiftEnabled site lists 10 applications for the headset and Wikipedia lists even more in production and on the way.

In a short letter to the troops, Iribe pledges “Oculus will continue to operate independently. We’re staying Oculus, we’re still building the Oculus Rift, our email addresses are remain @oculusvr.com, and most importantly, our hoodies will still say Oculus.” In turn, says Iribe, Oculus will benefit from Facebook’s huge pool of resources including its network back end, technology, talent, recruiting, and obviously enough, money.

The deal is expected to close in the second quarter of 2014.

What do we think?

$2 billion? It’s time to party like it’s 1999. The bubble is definitely going up. We will not be the first ones to point out that building a VR headset to the level of the current Oculus Rift or Project Morpheus is not hard. What’s magic is the team’s ability to attract a whole lot of star talent and to enchant gamers, hobbyists, and moneymen. That’s what Facebook has acquired.

We think Zuckerberg must have been afraid someone else would swoop in and buy Oculus and he was probably right. With the announcement of Playstation’s Project Morpheus, VR has suddenly gotten respectable. The industry has come together to form a consortium around VR called the Immersive Technology Alliance. Their focus is primarily on gaming.

The Facebook execs justify their acquisition saying just the game market alone could justify the $2 billion valuation and they say the initial focus for the company will remain gaming. There is plenty of work in the hopper.

Although most of the games being developed now are pretty much traditional 3D immersive games, it makes sense that a new genre will evolve that is better suited to VR. Twitch gamers can’t abide any kind of overhead, but online games like Eve Online (which has already committed to Oculus) seem perfect because they’re as much about exploration and community as they are about battles.

We believe this deal is likely to inspire new implementations of VR for scientific visualization, design, and other industrial uses. The current $350 price tag for the development platform is a pittance for professional applications, and a VR headset makes for a handy CAVE (Cave Automatic Virtual Environment) and the theoretical ability to share an experience over the internet has potential for all kinds of collaboration, but it’s not either or. Industry and science help discover technology breakthroughs and provide early funding, the gamer and hobbyist communities bring the enthusiasm and funding for bringing those technologies to the mainstream.