Facebook strengthens ties in Asia with Oculus hardware deals

SAN FRANCISCO — Facebook is already reaping a reward from its Oculus VR acquisition: Closer ties to Asian hardware makers.

Oculus, the virtual-reality headset maker Facebook bought for about US$2 billion (S$2.5 billion) this year, is working with Samsung Electronics on a version that connects to a smartphone from the world’s biggest producer. The company has also had talks with Sony, maker of the top-selling PlayStation 4 (PS4) game console.

The relationships cultivated by Oculus’ team may benefit Facebook as the world’s largest social-networking company moves into consumer hardware, an area where it has little experience. Alliances with manufacturers could lead to features such as highlighting Facebook applications as defaults on Samsung and Sony smartphones or immersing gamers in Titanfall on the PS4.

“Whatever the companies do with Oculus, eventually it’s a way of interacting with Facebook and connects Facebook to these hardware makers and more users,” said Mr Ivan Feinseth, chief investment officer at brokerage firm Tigress Financial Partners. “Facebook is going to want to become more integrated with hardware manufacturers as it expands in Asia.”

Asia is a huge growth market for Facebook, with the company’s user base rising faster there than in the United States and Canada. North American users increased 7 per cent to 152 million in June from a year earlier, while Asian users increased 26 per cent to 228 million, said a company filing with the US Securities and Exchange Commission that same month.

Still, Asia lags as a moneymaker — North America brings in almost three times as much in revenue. That is why Facebook is paying more attention to the region. The company this year signed a lease to open an advertising office in Beijing, though the social-networking site has been banned in China since 2009. Facebook still wants to sell to advertisers in the country.

Since the Oculus acquisition closed in July, Facebook has mostly helped support the unit with legal and accounting functions, chief executive officer Brendan Iribe said. The deals with Asian partners are sourced by the Oculus team, he said.

“As far as building out the ecosystem, it’s being spearheaded by Oculus,” Mr Iribe said. “We had this relationship with Samsung long before we even thought of partnering Facebook.”

Oculus has been working with Samsung for a year as they try to take virtual reality mobile with smartphones.

On Wednesday, the companies announced the Samsung Gear VR headset, which wirelessly connects to the new Galaxy Note 4, which can then access a virtual cinema, photos and other content. The headset will be available to developers in the coming months.

Sony is also talking with Oculus to spread the virtual-reality experience even while the Tokyo-based company works on its own headset, Project Morpheus, for use with games on the PS4, Sony Computer Entertainment’s Shuhei Yoshida said in Yokohama this week.

The relationship between the companies is as partners, not competitors, Mr Yoshida said. BLOOMBERG