Ma Huateng said that this is the third thing he is optimistic about after WeChat

[[160710]]

At the end of his speech at the World Internet Conference in Wuzhen, Ma Huateng asked everyone: "WeChat has been very successful in the past five years. What products will subvert it in the future? What will be the next generation of information terminals?" Then he mentioned that it might be VR.

A few days later, at the Peking University Guanghua Forum, Feng Xin, CEO of Baofeng Technology, responded remotely: "VR will be the center of the next generation of the Internet." Just two days after Feng Xin said this, Tencent disclosed the progress of its series of VR projects.

In 2015, VR became completely popular.

A carnival about virtual reality has spread rapidly from abroad to China. Whether it is large technology companies or emerging entrepreneurs, from the primary market to the secondary market, they are all stirred by this concept. When the dawn of industrialization shines into this field, how do the players under the surface play? Is it the same as the concept that was once hyped, after the carnival, only the phantom of fireworks is left?

Competition among giants: After the storm, big players are entering the market

In the domestic VR field, Baofeng Technology can be regarded as the first big player to enter the market.

In September 2014, Baofeng released its first VR headset, Baofeng Magic Mirror (hereinafter referred to as "Magic Mirror"). In one year, Magic Mirror was iterated four times. In early 2015, Magic Mirror was separated from its parent company Baofeng Technology and operated independently. Feng Xin poached Huang Xiaojie, the founder of Tiantian Dongting, to take charge.

Magic Mirror is a relatively simple VR headset. The industry divides VR headsets into three categories: PC headsets, mobile headsets, and all-in-ones. PC headsets need to be connected to a computer for viewing, mobile headsets can be placed in a mobile phone, and all-in-ones have independent processors, input and output functions, and do not require the use of any equipment.

In general, PC and mobile headsets occupy the mainstream position. The former has a high threshold, good experience, and high price, represented by HTC, Oculus and Sony; Magic Mirror is a mobile headset, simple and easy to use, but the product experience and technology are inferior to the former.

However, Baofeng did not conquer the world with products. From the beginning, it played the ecological card: seize the first-mover advantage, use a low enough threshold to cut into enough users; then use the capital and the advantages of a large company to attract content developers to settle in, and then connect the upstream and downstream of the entire industry chain, and finally form a large VR ecosystem. This can be compared to the Xiaomi ecosystem.

Magic Mirror is compatible with a variety of mobile phones. It builds a software platform based on hardware, covering a wide range of vertical content, currently mainly focusing on videos and games.

"In the new VR field, videos and games are the easiest to see results, and they are the users' rigid entertainment needs, so these two areas are the focus of our layout." Huang Xiaojie, CEO of Magic Mirror, told iHeima.

In April this year, Mojing received $10 million in financing from investors including Huayi Brothers, Tianyin, Aishide, Songhe Capital, etc. From this list, we can see the ecological layout of Baofeng.

In terms of content, Mojing will leverage Huayi's resources; Songhe Capital and Mojing jointly established a VR industry fund to invest in the entire industry chain. Tianyin and Aishide are the largest mobile phone distribution channel providers in China. Their entry indicates that offline will become the focus of Baofeng's layout in the next 1-2 years.

Huang Xiaojie told iHeima that expanding the user base is the most important thing he will do next year.

The annual report for the first half of 2015 showed that Baofeng Technology's performance dropped by 70%, mainly due to the loss of Magic Mirror. However, the capital market was advancing by leaps and bounds, with 33 daily limit increases at one point, all due to the birth of the VR concept.

Feng Xin said that another 1 billion yuan will be spent on VR.

Then, the solo performance is about to end, and the group performance will take the stage. Nowadays, various major technology players have begun to enter the VR market, and LeTV, Tencent, Baidu, and the rumored Xiaomi and Huawei are rushing to gain a foothold.

The entry of big players has turned the platform competition into a battleground between giants. It is becoming increasingly difficult for small players to get a piece of the pie in this battle because they have no resources, no funds, and no scale.

Fortunately, the prospects of VR are greater than imagined. At the current time point, small players still have huge opportunities, especially in the game and video markets where the flames have already been ignited.

VR games: a chance for small startups to turn things around

"Game entrepreneurs are facing the biggest opportunity in history." Fang Xiangyuan, co-founder of Time Machine Virtual Reality, described what he is doing.

This is a team from the Digital Entertainment Laboratory of Peking University, which has been working in the field of virtual reality for three years. The team first worked on video special effects, and then switched to 2B VR film and television. When it was discovered that VR games were a new trend, the team began to shift from 2B to 2C and devoted itself to the research and development of VR games.

"Mobile games have almost no chance, but VR games are a good time for startup teams to enter the market," said Fang Xiangyuan. In his opinion, games are inherently VR-like and suitable for early landing scenarios. In addition, games have abundant resources, can be monetized quickly, and do not require a lot of money in the early stages.

Fang Xiangyuan is one of the earliest players to enter the VR game field. He started to get involved in the field in July 2014, and received angel investment from IDG in March 2015. He is currently negotiating the A round. "It is a capital winter now, and it is difficult to get money for general projects, but the financing situation for VR games is much better. At least when you put your project out, there will always be people who will look at it."

In addition to financing, Fang Xiangyuan has also experienced much more benefits. In his opinion, due to the first-mover advantage, "in terms of R&D, you are at least half a year ahead of others. When others start to rise, you have already established barriers."

In addition, the early market dividend is obvious. After the game is launched, there are few competitors, so even if it is not perfect, it is easy to stand out. Li Hanyu, the founder of the game "Doraemon", deeply agrees with this. Unlike Fang Xiangyuan, he switched from mobile games to VR games.

"Doraemon" was launched in April this year and received angel round of financing in September, which was the capital winter at that time.

"Mobile games have been monopolized by Tencent, NetEase and other giants. No matter how perfect a small and medium-sized company does, it is difficult to break through. Fortunately, VR has arrived, and once it is done well, it will become popular immediately." Li Hanyu told iHeima that many mobile games are now lucky to be able to support the team, and it is very difficult to survive.

In addition to the support of capital, VR headset manufacturers have also stimulated the enthusiasm of game developers to a certain extent. Domestic headset manufacturers such as Lexiang, 3glasses, and Lingjing have offered millions of bonuses to encourage developers to create VR games and content. However, once the situation stabilizes, this bonus will disappear.

Fang Xiangyuan and Li Hanyu are eager to develop, and the more important reason is that most first-tier game companies have not yet officially entered the market. "They have stable revenue and will not give up mobile games for VR in the short term. They are just making some attempts. This is different from the start-up team that puts all its energy into this. It is still very difficult for entrepreneurs to open up new areas in the early stage."

The reason why first-tier game companies hesitate is that VR is a brand-new field, and its production methods and processes are completely different from those of mobile games. Apart from resources such as IP, large and small players are almost at the same starting line. At present, there are more than 30 companies in China that make VR games, but when it comes to game products, none of them dare to claim that they have a first-class experience.

"There are many competitors now, but no leader has emerged yet. When VR games have an 'Angry Birds' or 'Fruit Ninja', the leader will emerge." Fang Xiangyuan said. He agrees with Feng Xin's view that in half a year, the mobile game market will drop sharply, while VR games will surge and will be popular in China within three years.

Li Hanyu predicts that the turning point of the game market's growth will occur at the end of 2016. "By then, there will be a game with a monthly turnover of over 1 million. Then, a large number of developers will flock in and ignite the entire market."

In order to become the "Crazy Birds" of VR games, small and medium-sized game companies are racing against time. However, large game companies that have sensed the trend will join the race next year.

As a promising content at this stage, the development of film and television is also in full swing. In China, the leading content companies are Light Chaser Animation and Lanting Digital. However, the completely subversive camera language, shooting, actors and directors are all headaches for them, and the high shooting costs have increased the difficulty of entering the market. When an "Avatar" appears in this field, the new content era will officially begin.

Real estate, tourism...what will happen when traditional fields are combined with VR?

Because games, movies and TV shows have a natural connection with VR, they are at the forefront of VR content development. However, at this new node, traditional fields are not lagging behind.

In an experience room in Wanguo City, a heavy curtain blocks the light. Two locators are hung on the diagonal of the roof, with green lights flashing. The huge host on the ground squeaks, and the large TV screen in front is divided into two, showing the front and back corners of a living room. In the middle of the experience room, a middle-aged man wearing a headset walks back and forth in the experience room, with the handle dancing up and down in the air. Several thick wires on the headset connect the host and the TV. The picture on the TV is exactly the virtual living room where the middle-aged man is. The middle-aged man can't see the wall of the experience room and the host on the ground, and he almost bumps into it. A young man comes over and patiently guides him.

This young man is the founder of this experience room, Li Yi, CEO of Wuyouwofang. Through the experience, he shows people what a virtual model room is. This middle-aged man is a developer of a real estate company. After taking off the headset, he excitedly asked how to sign the contract.

Li Yi receives an average of five waves of similar developers every day, including some who fly all the way to Beijing to experience the virtual model rooms.

Li Yi had been a professional manager in the real estate industry, managing 1,000 employees at the age of 27. Because of his love for technology and his deep understanding of the pain points in real estate, he left his management position in October last year and founded Wuyouwofang, using VR technology to help developers raise the first batch of customers as quickly as possible.

"In the past, developers would often build model houses before delivering properties so that users could make decisions early. What we need to do is to let developers skip the model house process, so that the houses can be sold 3-6 months earlier. In addition, the cost of a virtual model room is much lower than that of a model house." Li Yi told iHeima.

According to him, the cost of a model room is roughly between tens to millions, while under the same circumstances, a virtual model room only costs 100,000 to 200,000, which greatly reduces the cost.

For users, being able to experience different apartment types and home decorations in one space saves time and effort. In addition, the virtual model room can be customized with decoration style, furniture material, interior color, size, etc. Compared with traditional model rooms, there are more visual options.

Since the launch of new experience equipment in July this year, Wuyouwofang has signed contracts with 150 developers, with a transaction volume of 200 million yuan, and has completed the installation of experience rooms in 20 cities. "Due to insufficient hardware, we dare not sign too many orders, and even if we sign, we cannot complete them. When the foreign hardware arrives next year, we can accept a large number of orders." Li Yi said.

Li Yi is not the only one in the field of real estate and VR integration. In addition to Wuyouwofang, there are also companies such as Zhidaojia and Meiwu365. However, each company has its own focus. Wuyouwofang focuses on developers, Zhidaojia focuses on technology, and Meiwu365 focuses on decoration.

As the profits of this segment soar, real estate Internet giants are also beginning to make moves. It is reported that Soufang.com and Fangduoduo.com are both planning VR real estate.

"It doesn't matter, let's compete and raise money to enter the market!" Li Yi said with a smile, "This field needs more players to educate the market together."

In addition to real estate, traditional fields such as tourism and news are also using VR to solve the problem of "being there".

Compared with games and movies, the combination of traditional fields and VR is not technically difficult, but it places higher demands on entrepreneurs to grasp the pain points in related fields. It is difficult for pure Internet players to participate in the competition.

True fire or exaggeration, which is the real prospect of VR?

When a new world is gradually opening up, capital is always the one with the most sensitive sense of smell.

Wu Jingwei of Songhe Capital once said: "The investment environment in 2015 was bad, and many VCs are slowing down. But we have to embrace the VR industry which is in its early stages." He believes that with breakthroughs in hardware, enrichment of content, and optimization of experience, VR will surely explode in the future.

Although Li Zhu of Inno Angel Investment Fund does not agree that VR will replace PCs and mobile phones in the future, he is very optimistic about investing in this field. Li Zhu started paying attention to VR in 2014 and has invested in four projects so far, including content and technology projects.

The concept of VR has been popular since last year, and more and more capital is pouring into this trend. Mainstream capitals such as GGV Capital, Legend Capital, Shunwei Capital, Sequoia Capital, and IDG have all invested in the VR field. According to relevant data, in the past year, the total investment in the domestic VR field has reached 500 million yuan.

Not only is the primary market in full swing, the secondary market is also eye-catching. According to Wind data, the virtual reality index has risen by 167.71% since the beginning of the year, and the A-share market in November was particularly vigorous.

Behind the soaring capital and stock prices, we have to face the current industrial situation: incomplete industrial chain, poor hardware product experience, unformed business model, insufficient market scale...

Some industry observers pointed out that domestic hardware products generally lack the time and technology accumulation for R&D. Foreign products such as Oculus and Sony have been conducting R&D for many years, but have not yet launched consumer-grade products. In contrast, there are more than a hundred hardware companies of all sizes in China, and most companies launch products after a few months of R&D. Most of them focus on low prices to grab users and market, but they are impetuous and eager for quick success in product polishing. The backwardness of products in terms of dizziness, clarity and delay directly leads to a poor experience, which will inevitably harm the first batch of users and then affect the development of the entire virtual reality industry.

In addition, since the industry is new and there are few users, it is often difficult for developers to get timely feedback on both hardware and content, which affects the rapid iteration of products.

There is also a lack of talent. Since foreign countries developed hardware and content earlier, the industry has cultivated a group of relatively experienced professionals. However, due to the late development of China, the talent pool is seriously insufficient and it is still in the initial stage of exploration.

A researcher from Huatai Securities pointed out that in the domestic VR industry, each manufacturer has its own way of doing things. There are remote controls, handles, somatosensory devices, treadmills, seats, steering wheels, microphones, etc., and there is no unified industry standard. The situation is chaotic. The formulation of standards is impossible in the short term, which means that the chaos will continue.

In addition, there are many companies in the market that are using the name of VR to replace old wine with new wine, hype concepts, drive up stock prices, and draw false fire to new industries that are groping in chaos, which will affect the subsequent development of the entire industry.

"The VR industry is still in its early stages, just like the era of mobile phones." Despite this, Huang Xiaojie believes that VR will be a much larger market than the Internet.

Amid the frenzy, false enthusiasm is prevalent. Perhaps more VR players, big and small, should calm down and think carefully, see things clearly, and then move forward with confidence.