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Gamers were quick to revolt against Oculus in online forums. Wall Street was quick to punish Facebook (NYSE:FB) by sending its shares down 7%. All of this came after Facebook announced its purchase of virtual reality pioneer Oculus VR for $2 billion.
You may be wondering why everyone hates the Facebook Oculus deal. The answer is different for the two major parties involved. The gaming community has taken to the blogosphere to vent frustrations about the deal. Wall Street tends to vent its frustrations by sending stocks lower, and it sent Facebook shares significantly lower.
Some background.
Oculus VR is a virtual reality company that makes the Oculus Rift, a ground breaking virtual reality headset. Its inventor, Palmer Luckey, is an expert in virtual reality head-mounted displays (HMDs) who realized he could do better than what was available at the time. A prototype of his Oculus Rift received high praise at 2012’s Electronic Entertainment Expo (E3) and his company was born.
Soon after the debut of the Oculus Rift at E3, the company announced a campaign on the crowdfunding site Kickstarter in order to help fund the Oculus Rift project.
Within four hours of the announcement the company had raised the intended $250,000. Within a day and a half the company had raised $1 million. The Kickstarter campaign ended with over $2.4 million raised.
Then came Tuesday’s announcement that Facebook was buying Oculus VR for $2 billion.
Social news sharing site Reddit was a popular spot for Oculus’ Kickstarter backers to vent their frustrations.
Reddit user Diels_Alder wrote:
Kickstarter leads donors to believe they are supporting the dream of Oculus technology and then turns them into supporting the dream of Mark Zuckerberg’s accountants. It’s not illegal, but it diminishes the value of Kickstarter to donors.
Another Reddit user, RaisedByACupOfCoffee, summed up the feeling of “betrayal” shared by many of Oculus’ Kickstarter backers:
They led us to believe that they were exactly the kind of ‘rare people’ who would refuse a buy out and tough it out to build their own consumer-first version, only to sell out to a universally reviled company that has consistently exploited its user base. I can understand their motivations, but I can’t help feeling betrayed.
Oculus’ Kickstarter backers, who seem to be largely electronic gaming enthusiasts, felt that Oculus had arrived to revolutionize the gaming industry and change the user’s experience of playing all kinds of games. They appear to have felt that Oculus VR was a company for them, a company for the people.
Gamers, it seems, hate the Facebook Oculus deal because they believe Oculus VR turned its back on them.
For its part, Wall Street seems to hate the deal as well.
It’s not uncommon for a company’s stock to fall after announcing a major deal, though the decline is generally more or less in line with the purchase price.
With a 7% drop in shares, Facebook’s total market capitalization fell from about $165 billion to $153 billion. That is a loss of roughly $12 billion in value as a result of the $2 billion deal to purchase Oculus VR.
Ouch.
Perhaps Wall Street is expressing concern that Facebook’s buying spree is getting excessive. The company purchased Instagram for $1 billion in 2012 and more recently purchased messaging app WhatsApp for $19.5 billion.
Investors may also be expressing displeasure at what seems like Facebook straying from its cash cow, sales of targeted advertising.
Between the gamers and Oculus backers and the reaction of investors, one thing is clear…the acquisition has very few fans. In fact, besides Zuckerberg and the Oculus VR executive team, it seems just about everyone hates the Facebook Oculus deal.
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