Image source @ Visual China
Text | VCPE Reference, author | Zhou Jianyu, Editor | Li Youran
Luo Yonghao's entrepreneurial trilogy really made a big splash. The second part of "True Return" has not yet finished, and the third part is already on the road.
According to 36Kr, Luo Yonghao will enter the AR industry. Before the words fell, Teacher Luo, who was busy and idle, appeared at the first AR conference in the clothing industry to cheer for the 0-sense comfortable shirt of Hongdou Men's Wear.
At the same time, a domestic AR smart glasses company, Hangzhou Lingban Technology Co., Ltd. (referred to as Rokid), also successfully completed a Series C financing of 700 million yuan last week, with a post-investment valuation of about US$1.07 billion (about 6.8 billion yuan), reflecting the capital's optimism about the AR industry.
From luo Yonghao, a continuous entrepreneurial mentor, to the trend of capital flow, is the domestic AR industry approaching spring? At the same time, as a collective term for AR, VR, MR and other technologies, can XR usher in an outbreak?
01 Building a Metaverse The underlying framework, the XR industry is poised to develop
What is XR?
VR/AR/MR is three progressive technologies, VR is virtual reality, that is, through holograms to create a fully virtual visual environment, do not have to be on the scene, you can have an immersive feeling; AR is augmented reality, both can show the reality of the situation, but also can display virtual information, so that people in the real world while activity to obtain the naked eye is difficult to get the full information; MR is mixed reality, it is a combination of AR and VR, take the strengths of the two to abandon the two short.
Taking the shopping mall as an example, people can experience the feeling of visiting the mall at home through VR equipment; wearing AR glasses and standing in front of the real mall, you can see the flow of people, discount information, commodity sales in the mall through the wall; if you use MR equipment, standing in front of the mall, you can not only see all the discount information, but also see the entire process of the mall from the planning map to the completion of the construction, as if you participated in the construction.
XR (Extended Reality) is a collection of three, through the fusion of the visual interaction technology of the three, to bring the experiencer a sense of seamless transition between the virtual world and the real world, but also the underlying framework for building the metaverse.
With the pandemic of the past two years, people's lifestyles have been greatly changed.
In the limited space of home isolation, the spiritual sustenance and insatiable social needs that have nowhere to be placed are heavily invested in the Internet. How to ensure the quality of life and improve work efficiency without leaving home has become an urgent problem that needs to be answered in the current society.
In this context, XR technology breaks the time and space limitations of the real world and is a good solution. At the same time, as the underlying support for building the metacosm, the XR industry is thriving.
According to the statistics of the future think tank, as of 2020, the global AR/VR market size has approached 100 billion yuan, and will exceed 350 billion yuan in 2025, with an annual compound growth rate of up to 54%; although the domestic AR/VR market started late, according to the prediction of yiou think tank, China's overall market output value is expected to reach 178.9 billion yuan in 2025.
In order to achieve such a goal, policies have also exerted efforts.
According to statistics, in 2021, there are 347 domestic policies related to XR, the content is mainly to encourage and promote the implementation of XR application scenarios, and most of them are To G markets, including cultural tourism, publicity and display, education and training, commerce and trade, medical and health, etc.
Image source: VR Gyro
In January 2022, the Ministry of Industry and Information Technology said that it will cultivate a group of innovative small and medium-sized enterprises that have entered emerging fields such as meta-universe and AI, and will combine the business distribution needs such as XR to promote the extension of CDN edge service nodes to small and medium-sized cities to effectively improve intelligent distribution capabilities.
The help and support of policies will create more opportunities and space for the development of the XR industry.
02 Tech giants have laid out XR
With policy incentives, capital has also risen.
According to the 2021 financing report, there were 340 financing and mergers and acquisitions in the global XR field, an increase of 55% year-on-year; the total amount reached 55.6 billion yuan, an increase of 127.98% year-on-year. Among them, the domestic XR industry completed a total of 124 financing and mergers and acquisitions, accounting for 36.5%, an increase of 130% year-on-year; the total reached 18.19 billion yuan, accounting for 32.7%, an increase of 778%.
Among them, there is no shortage of technology giants.
Facebook, which entered the metacosm with an all-in posture, spent $2 billion as early as 2014 to acquire VR equipment company - Oculus. The subsequent introduction of the VR Eye Oculus Quest2 significantly increased Facebook's share of the VR device market with extremely high cost performance. In the first quarter of 2017, shipments reached 100,000 units, accounting for only 4.4%, and by the first quarter of 2021, cumulative sales had reached 4.6 million units, setting a new record. A good start was made for Facebook's plan to snatch the entrance to the Metaverse.
On the other hand, Google, which uses AR as the entry point, acquired the Canadian smart glasses company North in 2020, making full efforts to better enter the consumer AR glasses market.
In contrast, mobile Internet overlord Apple, although it has not bet on the metaverse on the surface, has begun to vigorously enter the AR field and applied for a number of AR-related patents.
Although domestic capital entered the market late, the momentum was by no means lost overseas.
In January this year, byteDance, the world's most valuable technology unicorn, invested exclusively in Hangzhou Li Weike Technology, which is laying out the XR track.
Li Weike, who focuses on the research and development of virtual people, has not yet come out of the circle, but his ambition can afford the expectations of bytes. The company is committed to integrating AR technology into AI, and is determined to create China's first AI virtual digital person with a truly emotional link.
However, the most exciting dynamic of Byte is that in September 2021, it acquired PICO, a global leading brand of AR/VR with unique innovation, research and development capabilities and manufacturing capabilities, for a sky-high price of 9 billion. Compared with PICO's post-investment valuation in March of the same year, the price given by Byte is 1 billion yuan more.
The layout of the meta-universe is naturally indispensable to Tencent.
Tencent's strategy to enter the meta-universe focuses on acquisitions rather than innovation. At present, Tencent's layout plan mainly focuses on the three components of the underlying architecture, back-end infrastructure and content scenarios. For XR, the supporting technology of the underlying architecture, Tencent occupies a favorable position in the VR/AR ecosystem by investing in Epic Games and Snap. In January this year, Tencent invested in Heartland Technology in the XR track, holding 52.98% of the shares and becoming the majority shareholder.
It is worth noting that not only the tech giants have taken action, but the VC/PE community's attention to XR has also continued to rise. Sequoia China, IDG Capital, Matrix Partners China, CICC Capital, Temasek, Eagle Fund, Tsingkong Ginkgo, Yunfeng Fund, Jiuhe Venture Capital, Vertex Investment, SDIC Meiya Fund and dozens of other institutions have entered the game.
As early as 2017, Lingxi Micron light received tens of millions of Series A financing from Sequoia China. At the beginning of March this year, Lingxi Micron light completed a series B financing of 100 million yuan, and the investors included SDIC Meiya Fund, Fuzhikang, Medica, Beijing Tianhe Venture Capital and Shenzhen Wudao Capital.
03 Development dilemma and entry timing
It is worth noting that on the whole, the domestic XR industry has ushered in both great opportunities and many challenges, and the shortcomings in core technology, application platform, content ecology, and scale effect still need to be improved. Jiang Yuanyuan, an associate researcher at the Institute of Applied Economics of the Shanghai Academy of Social Sciences, said.
Specifically, at the core technology level, domestic XR hardware research and development began in 2014, and the technical level has tended to mature, but it has not yet achieved large-scale mass production. Huang Liangliang, vice president of Shenzhen Yijing Virtual Reality Technology Co., Ltd., believes that the reason is that the industrial chain of XR is too long, and now the quality of hardware technology lacks a unified standard in the industry.
At the application platform level, as a new application form, XR has not yet formed an absolutely advantageous software and hardware platform in the market. The uncertainty of R&D competition limits the development of its front and back end to a certain extent.
At the content ecosystem level, the diversity of platforms makes content research and development need to cooperate with different software and hardware, and content on different platforms is difficult to share. As a new field, the lack of content development materials and practitioners has also caused great obstacles to the development of the XR industry.
In terms of scale effect, the application operation of XR is completely different from the traditional application, which means that the popularity of XR products in society is difficult, and it still takes a long time to establish user habits and cultivate market demand.
For investment, though. At the beginning of the metaverse era, XR has entered the gestation period before rapid development, is it the best time to enter XR now?
VCPE reference to a number of XR industry investment research reports found that analysts have given high ratings. The results of the study show that the penetration rate of XR equipment continues to increase, driving the rapid expansion of assembly, optics, and display industry demand, and it is recommended to actively pay attention to domestic companies that have laid out cutting-edge technologies in the VR/AR industry and entered the supply chain of global VR/AR brand manufacturers.
It is worth noting that in view of the sales volume of VR/AR equipment, technological progress and landing, downstream demand are less than expected, the industry competition is becoming increasingly fierce and certain systemic risks, investment in the XR industry still needs to be cautious.