Byte Pico and iQiyi Adventure copied Meta's homework

Image source @ Visual China

Wen | New Knowledge of Science and Technology, Author 丨 Wang Siyuan, Editor 丨 Yi Page

In order to leverage the consumer side, the money-smashing war of VR hardware manufacturers has begun. As the only two major Internet manufacturers involved in this field in China at present, ByteDance and iQiyi have become the protagonists on the stage.

"Hey, the race is about to start!"

"Stay at home and open your eyes!"

"Having played so many games, dare you come to something real?"

From douyin open-screen advertising, 24-hour uninterrupted live broadcast, various information flow pushes, to the Spring Festival Gala, sponsoring variety shows, and then to the large-scale opening of offline experience stores, Pico, which is included in bytes, is everywhere.

In contrast, iQiyi's adventures are not good at words, but their style of doing things is fierce. The 30 most mainstream VR games will be directly reduced to 0 yuan, and the "Punch Card 0 Yuan Free" campaign will be launched for the Dream Premium Edition of Adventure.

For a time, "brainwashing advertising" and "0 yuan free delivery" became industry labels, and domestic VR manufacturers also intended to use low prices to rob seed users on the consumer side and replicate the success of foreign Quest.

However, it is true that the VR industry has high potential for development, but in the domestic market, these VR manufacturers have to face key problems such as lack of ecology, difficult to change user habits, and lack of technical talents.

01, the explosion of the explosion

2016 can be said to be a year of unlimited scenery for the VR industry, and it is also the first year of VR recognized inside and outside the industry.

This year, the global virtual reality industry market size of 4.68 billion US dollars, a substantial increase of 192.8% year-on-year, standing on the VR outlet of startups and large manufacturers, really feel that "standing on the outlet, pigs can fly."

According to the data, in 2016, the investment and financing scale of the global VR and AR industries increased by 387% and 968% respectively year-on-year, from 280 million yuan and 2.48 billion yuan a year ago to 2.99 billion yuan and 12.07 billion yuan.

But in stark contrast to the VR industry, which has attracted much attention in the capital market, VR is getting farther and farther away from ordinary users.

Whether it is the increasingly common VR experience hall in shopping malls or the virtual reality-based play projects in amusement parks, these are far from the daily life of users, and the number of VR devices on the consumer side has not increased significantly.

This situation did not change until 2020 after the epidemic.

In September 2020, Meta (formerly Facebook) released Quest2, which leveraged the consumer side of the global VR market. According to IDC's "Global AR/VR Headset Market Quarterly Tracking Report, Fourth Quarter of 2021", global VR headset shipments reached 10.95 million units in 2021, of which the share of the Oculus Quest series reached 80%.

Meta's official leaked news said that quest2 sales have reached the sum of the total sales of all VR products in the past, and it is the first product to truly detonate the VR market.

The reason why Quest2 can become a blockbuster is inseparable from Meta's continuous investment.

The beginning of VR hardware for the entire Internet industry is a completely new field, not like assembling mobile phones, finding enough suppliers, in a variety of design solutions between the optimal combination can make a good product.

The clarity of the display unit, the choice of optical modules, the accuracy of positioning and tracking technology, the processing power of the computing unit, the ergonomic design, the external materials and industrial design, etc., all have not a mature industry standard.

After 2014, many companies entered the field, but most of them were to make quick money or take advantage of the opportunity to increase the market value, and the products launched had no user experience at all.

From Rift to GearVR, to Oculus GO, to Quest, there are very few businesses like Meta that are confident in VR and willing to continue to invest.

Of course, the main reason why Meta invested for many years until Quest2 detonated the market, in addition to being more technically mature, Zuckerberg's low-price strategy also provided strong support for the popularity of Quest2 on the consumer side.

Before the release of Quest2, the price of VR all-in-one machines on the market was generally more than 5,000 yuan, and the high price directly turned away ordinary consumers. The Quest2's offer price is only less than 2500 yuan, and the low price matches the needs of players who are just ready to contact VR, and also rapidly increases the popularity of VR all-in-one machines.

In addition to disruptive hardware products and prices, what makes Quest a big seller is also high-quality ecological construction.

Oculus has adopted a relatively strict content access system, and only apps that meet the standards can enter the Oculus store. In the short term, this policy may lead to relatively little content, but the Oculus Rift store and Quest store, which have been in operation for many years, plus games that can run SteamVR, make Quest the best VR platform today.

Compared with PSVR only games, HTC can only play PCVR applications, Quest, whether on PC or mobile, has a large number of high-quality applications to use.

These high-quality applications also directly bring effective growth to the scale of the industry. According to statistics, in March 2020, after the launch of "Half-Life: Alxy", the number of VR device users counted by Steam in that month increased by more than one million; at that time, there were 20 games on Oculus Quest that also had revenues of more than one million US dollars, and the data continued to rise.

"The big sales of Oculus Quest 2 and Half-Life: Alyx have led to the industry's blockbusters in terms of software and hardware, plus there are now a lot of content creators coming in, and the price of the product is gradually falling." Zhang Daoning, founder of VR company NOLO, judged that the VR market has moved from niche to public.

Domestic VR companies represented by Pico and iQiyi, which are currently competing for seed users with low-price marketing, are embarking on the right path that Quest has verified.

However, compared with the overseas VR user base of tens of millions, the content ecology has formed a positive cycle, and the domestic consumer market is obviously in its infancy.

Changes in hardware technology and the reduction of product prices essentially provide consumers with a lower barrier to entry, and the software ecosystem is where Quest really retains users and achieves profitability. This is also the weakness of domestic manufacturers.

02, there is no "VR Store" in China

Zuckerberg has previously said, "I'd love to take money from places like app stores and then try to keep the price [of VR devices] as low as possible." "This is basically similar to the console market, where software and add-on services are monetized after hardware penetration increases.

But in the domestic market, this road is not easy to follow.

The first is the impact of the domestic market environment. From the C-end point of view, since the console game was banned to unbanned, the faults that appeared in the middle were made up by mobile games, forming a unique player habit and culture in China.

For example, compared with the buyout game on the host, the F2P model ("Free-to-play", free download + in-app purchase) is more easily accepted, and the experience threshold is lower, which eventually leads to a continuous increase in domestic mobile users, the sluggish host market, and the lack of VR development talents in China.

Developers in many other fields joined VR in 2016, but after a few years, most of them quit or switched careers. The developers who stayed behind were basically working on solutions, and even the VR game team had to take on some outsourcing projects to maintain cash flow to ensure that the game could be successfully developed.

In addition, most of the domestic VR content development teams do not have global distribution capabilities, and most of the works do not meet the needs of overseas markets. In the "Best-Selling VR Game List" released by Steam every year, there are few domestic games.

The market environment is not friendly, publishers are lacking, the ecology has not been formed and many other problems, most of the entry-level VR developers are still on the edge of survival, individuals, small development groups monetization ability is not strong, it is difficult to reach the core area of the industry.

Therefore, for the manufacturers who are now entering, grabbing people is also the key to developing their own VR ecology.

At present, the recruitment phenomenon of the VR/AR industry is mainly manifested as: new players rob people from old players, old players rob people from small players, and talents are gathered in first-tier cities as a whole, and the Matthew effect is obvious. However, an industry HR also stressed that the VR industry is actually a niche industry, so the bosses know each other, and the core talents are not easy to dig.

"To be honest, although the industry may be exploding now, it is actually a niche industry, and it is really very difficult to cultivate a software or hardware talent that really understands technology, and it is also afraid of being poached, which has also led to the intensification of talent competition between enterprises now," hr said.

Of course, the problem of chicken or egg on the C-side has been solved overseas, and domestic developers are still facing the contradiction between the user base and the content caused by the inability to self-cycle.

Major manufacturers have to consider the development plan of the content ecology under the premise of lack of user base, limited capital investment and urgent need for the development of the company, and such a trade-off comparison can only make the support of manufacturers retreat to the second.

Oculus officially announced that only one part of the acquisition plan, Meta claimed in 2019 that it would spend at least $1 billion to acquire VR development studios.

For a VR production, it is relatively common for Oculus to give developers millions of dollars in financial support. For some IP adaptations based on games, movies and other needs, generally Oculus will seek a developer team for the needs, and the support given by such projects is generally in the range of millions to tens of millions of dollars.

Compared with foreign countries, the procurement scheme of domestic mobile VR content platforms is obviously more "Buddhist". Under normal circumstances, even some large domestic manufacturers still enrich their own mall application ecology by purchasing content in batches of tens of thousands of yuan.

The final result of this is that some standard content floods in a short period of time, and over time, it forms a situation of "bad money expelling good money", and it is more difficult for high-quality VR content to emerge.

Overall, the relatively free research and development environment abroad, the relatively advanced scientific and technological theory and practice foundation, and Meta's large investment in the construction of VR content ecology have given the overseas VR industry more suitable soil for growth.

For domestic manufacturers, the current VR industry has entered the hardware and content dual drive stage, the gap between major manufacturers in hardware technology is getting smaller and smaller, the next thing that needs to be done is to ignite the market with high-quality content, of course, but also to use high-quality content to bring revenue.