In a surprise announcement, the social networking company said it had paid $400m in cash and the rest in more than 23m shares, currently worth $1.6bn [£970m], plus an additional $300m pegged to future performance.
A detailed company statement said that Facebook recognised how Oculus had built a solid following among game developers, but that virtual reality technology would expand to other industries from communications and entertainment to education and media.
"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," said Facebook founder and CEO, Mark Zuckerberg. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."
Oculus will remain in its base at Irvine in California while the transaction closes in the second quarter of the year. The company has just announced the Dev Kit 2 version of the Rift headset, complete with high definition displays and better head-tracking hardware. The company says it has also eliminated motion blur and judder, which should significantly reduce motion sickness in users – a vital element in ensuring wider consumer use for the device.
"We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world," said Brendan Iribe, co-founder and CEO of Oculus VR. "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."
In a lengthy post on Facebook, Zuckerberg expanded on his vision for Oculus.
"After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home," he said.
"Virtual reality was once the dream of science fiction. But the internet was also once a dream, and so were computers and smartphones. The future is coming and we have a chance to build it together. I can't wait to start working with the whole team at Oculus to bring this future to the world, and to unlock new worlds for all of us."
Formed by 21-year-old college drop-out Palmer Luckey, Oculus VR hit the headlines in 2012 when the company raised over $2m to manufacture its Oculus Rift VR headset on the crowd-funding site Kickstarter.
The technology, which features a head-mounted display and motion-tracking sensors, caught the attention of John Carmack, the co-creator of the Doom video game series who evangelised the concept to the rest of the games industry.
More than 60,000 developer versions of the headset have been sold and dozens of games already support the technology. The device is not expected to be available to the public until early 2015.
The announcement follows a rumour posted to Reddit last month. User threewolfmtn claimed: "So no way to confirm this, but my friend works in the same building as Oculus, and he ran into Mark Zuckerberg taking the elevator to Oculus' floor."
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