Amid the proliferation of copycat giants: A survey of the domestic VR ecosystem

  Introduction

It is worth noting that BAT has also switched to VR. On March 17, Alibaba announced the establishment of a VR laboratory, which will leverage its own platform advantages to simultaneously promote VR content cultivation and hardware incubation. In December last year, Tencent announced the Tencent VR SDK and developer support plan. Baidu Video also launched a VR channel that month.

The giants are ready to fight at the starting line, and the smell of gunpowder before a big war is spreading.

At around 9pm on March 16, 34-year-old Cao Junwei had just started to eat dinner in Beijing. He rushed from Nanjing to Beijing that day just to participate in the "2016 12th TFC Global Mobile Game Conference" to exchange technical achievements with VR (Virtual Reality) "industry partners". After studying in Nanjing for 7 years and graduating with a master's degree in 2007, Cao Junwei, who majored in aerospace, became one of the founders of Nibiru (Ruiyue Information).

This startup team, headquartered in Nanjing, has only more than 100 employees. Riding on the VR (Virtual Reality) craze, after several rounds of investment, "The C round will be launched in May and June, with a financing scale of over 100 million yuan and a company valuation of 1 billion yuan." He seemed very happy when he mentioned the upcoming financing to the reporter of 21st Century Business Herald.

Several domestic VR companies interviewed by the reporter were established within three years. They all agreed that Facebook's acquisition of Oculus VR for $2 billion in March 2014 marked the beginning of VR's rapid explosion in China. Young, being favored by capital, and full of hope for the future, this is a collective commentary on the current Chinese VR companies.

These VR startups in Beijing, Shanghai, Shenzhen, Nanjing and other places all claim to have original technology in some aspects, but they are not confident about the impact that foreign brands may have in the future. Data shows that more than 200 VCs invested 3.5 billion US dollars in the VR field last year.

It is worth noting that BAT has also switched to VR. On March 17, Alibaba announced the establishment of a VR laboratory, which will leverage its own platform advantages to simultaneously promote VR content cultivation and hardware incubation. In December last year, Tencent announced the Tencent VR SDK and developer support plan. Baidu Video also launched a VR channel that month.

The giants are ready to fight at the starting line, and the smell of gunpowder before a big war is spreading.

VR investment boom

It is understood that the internal code name of Alibaba VR Lab is GM Lab. In terms of content, Alibaba has fully launched the Buy+ plan and will cooperate with its film, music, video websites, etc. to promote VR content output.

After Tencent announced its VR strategic plan at the end of last year, it launched a head-mounted display device (HMD), namely DK, in March this year, which integrates sensors and dedicated screens.

The awakening of the giant comes from Facebook's acquisition of Oculus VR. For many people in China, VR is still as elusive as the mind of a first love.

At noon on March 16, the reporter was on the Beijing subway and opened a link on a domestic website that claimed "VR takes you to the two sessions". By moving the phone or rotating the body in a circle, one can indeed get a multi-dimensional perspective that is different from looking at a flat surface. Is this VR? Cao Junwei denied it, saying that VR creates a virtual environment that makes people feel like they are in reality. "If you were originally on Earth, watching VR is like being on Mars." "Immersion" is a common descriptor used by practitioners to describe the visual effects of VR. This term exaggerates the imagination of ordinary people about VR.

VR has a huge appeal to investment companies, which has led to the phenomenon of collective betting on VR in the above industries. The industry calls 2016 the first year of VR, and believes that more consumer-oriented products will appear this year, but there are also views that the market focused on VR investment and layout in 2015 and 2016, and the VR explosion period is expected to be in 2017-2018.

On March 15, Yang Tao, founder and general manager of Beijing Shengwei Technology Co., Ltd., said in an interview with a reporter from 21st Century Business Herald: "There are no (industry) standards for VR at present, both internationally and domestically. It is completely in a chaotic state. In the future, strong companies will definitely stand out."

According to the reporter's observations in recent years, Wang Zhongjun, chairman of Huayi Brothers, has repeatedly expressed his emphasis on real-life entertainment business in public. In October 2015, Huayi acquired part of the shares of Saint Vitus, which was considered an important move to increase its investment in real-life entertainment.

Yang Tao analyzed that for Huayi, "how to implement IP is a big problem". After a movie is made, how to continue the vitality of IP in scenic spots and theme parks in another way is not something Huayi Brothers is completely good at and professional in. Saint Vit's official website shows that it "is good at using photoelectric art to make virtual entertainment real, and through virtual reality and human-computer interaction technology, it creates a unique immersive gaming experience."

Unlike Yang Tao's Saintwit, ANTVR mainly produces wearable devices such as VR, AR, and holographic reality. Wang Xinghua, the head of the company, told the 21st Century Business Herald reporter on the afternoon of March 14 that ANTVR does its own research and development and has patents at home and abroad. According to him, the current mobile terminal equipment has very low technical content and simple products, but the VR helmet all-in-one connected to the PC is relatively more technical. Regardless of whether it is a mobile terminal or a PC terminal, each company has its own set of "core algorithms". For example, many counterfeit manufacturers in Shenzhen can copy some product appearances and lenses, but the core algorithms of the products cannot be copied.

Wang Xinghua admitted that the market is very chaotic now, but the counterfeit manufacturers mainly counterfeit mobile devices, such as mobile phones, and it is still difficult to make PC helmets. "In China, there are 100 to 200 counterfeit manufacturers in Shenzhen, but there are less than 10 manufacturers of PC helmets in China, and only about four PC helmets have been put on the market for sale." He revealed that domestic VR manufacturers do not produce chips independently, but use third parties such as Qualcomm and Inter.

Ant Vision, which has been offered olive branches by Lenovo, LeTV and other companies, currently has only 60 employees. Ant Vision was established in March 2014 and received 5 million yuan in angel round investment. In December of that year, it received 10 million US dollars in investment from Sequoia Capital. In December last year, it received 300 million yuan in round B financing. "All the better domestic companies have received financing," Wang Xinghua said with a relaxed tone when talking about the funds. At the same time, he said that hardware research and development is indeed very expensive.

The core of Nibiru's products is the VR system and the mobile VR Launcher. Wu Zengmei, another head of the company's marketing department, repeatedly told the 21st Century Business Herald reporter that Nibiru "connects peripherals and content, and belongs to the middle layer." It does not make hardware equipment or research and development, but makes VR systems, acting as a bridge between hardware and software. "The VR all-in-one system on the market is ours." In December 2015, Nibiru announced that it had received 80 million in Series B financing led by Hezhi Capital and followed by several investment institutions such as Yida Capital. Since its establishment in January 2013, Nibiru has completed tens of millions of financing from Qingsong Fund (Angel Round), Oriental Fortune Capital (A Round), and Yida Capital (A+ Round).

Concerns about foreign investment inflow

"In the next decade or even decades, the impact of overseas factors will affect what the Chinese VR industry will become. That will be the time for an industry reshuffle. Large foreign companies have the ability and qualifications to bring about subversion, which the domestic market cannot cope with." Wu Zengmei expressed her personal concerns about the future of the VR market.

It is a fact that there is currently a lack of unified standards in the VR field. Wu Zengmei believes that it is difficult for VR hardware systems to form standards like computer products. Standards similar to Windows systems are "expensive and require a lot of investment, and not every company can do it." Secondly, from making chips to making VR systems, these manufacturers will involve many different fields, "requiring support from many large manufacturers because the interfaces and standards are different." Combining these reasons, she believes that domestic VR is still in a very early stage, and getting involved in VR requires deep technical accumulation. Don't touch it if you haven't thought it through. More importantly, the current user penetration is low and it has not yet reached the user. This means that VR still has a long way to go before industrialization.

Wang Xinghua believes that once the VR market is really fierce, "no more than 5 domestic VR manufacturers will survive." He told our reporter that there are risks in VR, but there is no need to worry if you have core technology. "Exclusive optical technology" and "compound eye optical technology" are the core of Ant Vision. What is the prerequisite for mastering core technology? Possessing core technical talents. Our reporter learned from many VR companies that the common point of these companies is that the proportion of technical employees is the highest. For example, among the more than 100 employees of Nibiru, 70% are in technology research and development and product design.

According to Wang Xinghua's prediction, there may be only five companies left in the future, and the first to be eliminated will be "small companies in Shenzhen". He believes that these companies are just "taking advantage of the trend to make some money, and when the mainstream (VR companies) abroad and at home come up, they will stop doing this". Wang Xinghua is also worried about the lack of unified industry standards in the current VR market. He believes that after a period of development, giant companies may unite to make standards, and currently "small startups do not have the ability to do it". In addition, although people have high hopes that VR products will replace computers and mobile phones in the future, they are still at the "big brother" stage. Consumers experience more or less discomfort with some VR products on the market, such as dizziness and vomiting, and "the technology is not yet very complete."

In Cao Junwei's eyes, "Shenzhen small companies" are part of the customers. "We are not enemies with these minions. We make VR systems to help them. When the minions do not have the ability to make systems and want to make hardware, they have to sell products. They have channels and brand effects, and we have technology." For large cooperating companies, such as mobile phone manufacturers, through Nibiru's technology, VR is embedded in the functions of mobile phones, allowing consumers to experience entry-level VR feelings. If they want to further develop, both feature phones and copycat phones have opportunities in this process. And just like the development of the mobile phone market, copycat phones may also become regular in the future and become "less copycat".

Talking about the possible fierce competition after foreign investment enters in the future, Yang Tao believes that his company has one more layer of armor than Wu Zengmei and Wang Xinghua's company, that is, the business they do is different. "If we do 2B (meaning targeting customers), we will not be occupied by foreign manufacturers, because foreign manufacturers have not done much research in 2B, and their business strength in this area may not be stronger than ours. We have a negative attitude towards other domestic companies, thinking that there are risks in the wolf coming, because there is no unified standard, etc., which may cause a blow to 2C (meaning targeting users, such as individual users)."

Cao Junwei is confident about the future. "After the United States, China will be the second major VR country. China has genes that are different from those of foreign companies. I don’t think foreign brands are finished once they enter China, but some areas where imitation is serious may fail." The obvious advantage of Chinese VR companies lies in capital intervention. It is precisely because of the massive influx of capital that many companies have increased their research and development since 2015, which has greatly stimulated Chinese companies' innovation in VR technology, although they are not as confident as the United States.

Why is capital interested in VR?

When will the fierce competition and reshuffle of VR appear? "When capital really cools down, the reshuffle will really come. When those who burn money have burned all their money, capital will invest in more powerful companies. It is difficult for companies without strength to attract the favor of capital." Yang Tao told the reporter of 21st Century Business Herald, "Before the second half of 2015, capital investment in VR failed. Capital did not understand this industry. In the next step, I hope that companies in the industry will work hard to make the technology solid and truly bring out the core value, so as not to be eliminated when the tide recedes."

"After several rounds of reshuffles, the product price/performance ratio has been improved to a level that the audience can accept, and the ones left in the end must be the industry leaders." On March 15, Wang Yujue, director of LeTV's content production center, told reporters that as for the issue of inconsistent industry standards that some companies are worried about, he believes that as long as the final content presented is "the same resolution and high definition, it's fine, just the effect and brand are different." When it comes to the issue of the entry threshold of VR, he believes that now everyone is still fighting over the technical parameter threshold, and in a few years the reshuffle will reach the "experience threshold", and people who have not done this may not be able to enter, so it is better to act early.

"LeTV has many good IPs and plans to make VR movies in the future. The previous movies "Go Princess Go" and "The Legend of Miyue" can be adapted into VR versions. The transformation of video media formats began with the transition from the film era to the digital era, from standard definition to high definition, and from high definition to 3D. Now it is the transition from 3D to VR. Among so many technological revolutions, VR is the biggest revolution," Wang Yujuan told the 21st Century Business Herald reporter.

What characteristics of the VR industry have investors taken a fancy to? On March 16, a senior executive of Shenzhen Qianhai Hezhi Capital Management Co., Ltd. said in an interview with a reporter from 21st Century Business Herald: "VR applications have already taken off, and this is a direction we are firmly optimistic about." The person revealed that before leading the B round of financing of 80 million yuan in Nibiru in December 2015, "we encountered many (similar companies), but we picked and chose, and we chose Ruiyue. We saw the opportunity and allocated 30 million yuan."

Is the investment in VR just a passing fad or is it truly "immersive" in this industry? The person told the 21st Century Business Herald reporter that VR has become a trend in both hardware and content, and now it depends on the breakthrough of technology and the richness of content. "If there are still good (companies) we will invest in them. We have also invested in an AR company. They are all future technological growth industries."

For any start-up industry, the success rate of going it alone is low and the company may decline. The above-mentioned person emphasized that the VR industry must have the support of everyone. "It will be easy if everyone is willing to do it. If it only depends on one or two companies, it will be troublesome."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.