VR In China: Bubbles Co-exist With Stable Growth

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VR In China: Bubbles Co-exist With Stable Growth
September 27, 2016

Virtual Reality (VR) has became hot in China’s tech investment scene ever since last year. It is opening chances for foreign entrepreneurs. Andrew D. Kim, the former head of Business Development at Oculus’ Korea branch, joined China’s leading VR media platform, 87870, in September 2015.
 
Aside from being a VR media platform, 87870 offers two other services: VR content distribution and “VR+” projects. On the website there are over 4,000 VR games and videos. Its “VR+” projects apply VR to traditional industries, such as education, military, and real estate.
 
Why China?

Because Facebook has not entered China, Kim said that means Oculus will miss one-third of the world’s population — the China market, and Asia. He took the chance and came to China. The global VR boom dates back to 2013, when Oculus shipped its long-awaited Development Kit 1 (DK1).
 
The industry soon bloomed in China, as Kim explained that among the total 117 VR/AR investment cases in China since 2012, as many as 95 of them had occurred since 2015. Investment volume since last year accounts for about 90% of all the total VR investment since 2012.
 
HTC Vive has conquered the world – as well as Chinese consumers – with its outstanding VR devices, with their room-scale VR head-mounted display (HMD). In April 2016, the first batch of HTC Vive were handed to Yao Ming by Alvin Wang Graylin, China Regional President of VR at HTC. It was a landmark moment that the world’s highest-quality VR devices were commercialized, and becoming more accessible to ordinary consumers.
 
So far, virtual reality hardware is still in its infancy in China. Mainstream high-end hardware is bulky and cumbersome, with quite a few wires connected to HMDs, according to a report this month by China’s Ministry of Industry and Information Technology. Compared to hardware, Kim sees bigger opportunities in the production of VR content. He defines VR and AR as wearable, visual computing platforms. “If you look at VR as a visual computing platform, you will be able to see that there are many categories of things that you can do and work on that will be ultimately connected to VR,” Kim said.
 
What’s more, the Chinese government has invested generously in hardware, including semiconductors and display. And there are VR content platforms. However, in Kim’s eyes, VR content producers are not numerous enough. Lu Lu, a founder of an internet security startup in Beijing, said that there are two reasons causing the shortage of VR content in China. One is that China has not published official hardware standards. Content producers in China are working according to Western standards, on a temporary basis.
 
Another reason is that the boundary between VR platforms and content is blurred. Compared to making content, companies prefer to make platforms.
 
There is a question to be asked. What has triggered investors, tech behemoths and startups to all enter the VR/AR industry? Kim believed that there is huge market demand. Display makers now can produce 4K displays, which are already good enough for traditional screens, including smartphones and tablets. But where should their 4K displays go? Virtual reality seems a good destination.
 
The case is similar for GPU and CPU companies. Growth in shipment of PCs, tablets and smartphones is slowing. Executives see an opportunity to secure new growth areas with virtual reality. Even for telecommunication companies, they have increasingly fast 4G and 5G networks. You can download a video within seconds. The problem for them is that they need to figure out how to make consumers use the telecommunication traffic.
 
All these tech industries pin their hopes on VR. “What I see so far in the VR industry, is the bubble story. Of course Oculus did a good job in feeding the bubbles. And Mark Zuckerberg actually helped,” said Kim. He added that a lot of other companies are “making rainbows and colorful stories” – big, exciting plans that haven’t yet succeeded. For many of them, it’s just the end of the story. Still, he believes that the VR industry is healthy. People are shifting their focus, little by little, to be more practical.

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