Cooling-off period for top players
Recently, the annual Game Developers Conference (GDC) was held in San Francisco, USA. As a grand ceremony for the global game industry, many XR equipment manufacturers also appeared at this GDC conference. Although it looks very lively, life is not easy for the leading manufacturers who have devoted themselves to it.
Meta, who has created the highlight moments of the Metaverse, has laid off staff all the way from 2021 to the first quarter of 2023. In mid-March, with the release of the latest quarterly report, Meta announced that it will launch a new round of large-scale layoffs: in the next few months, it will continue to lay off 10,000 people and close more than 5,000 positions that have not yet been recruited.
Although its CEO Zuckerberg still insists that building the metaverse is the core work of future network socialization, it is undeniable that the virtual fire of the metaverse has been almost extinguished by a new wave of AI tool applications. XR, which is known as the entrance of the metaverse (Extended reality) Business is the first to bear the brunt.
The so-called XR is actually a collective concept of VR (Virtual Reality) and AR (Augmented Reality), that is, an immersive virtual environment can be realized through external wearable devices such as glasses, and the sense of touch can also be realized on the basis of vision, hearing and spatial perception.
In 2021, when the real society is divided by the COVID-19 epidemic, the concept of a fully virtual metaverse becomes popular, and almost all technology companies can find a place in this vague and huge concept. With the popularization of 5G, the XR human-computer interaction equipment is just in time, and it is nested into the metaverse blueprint.
In October 2020, Meta’s VR headset product Oculus Quest 2 was launched, and by the beginning of 2021, the market share has exceeded 70%. At that time, domestic Internet giants also regarded the Metaverse as a new point of contention. In August 2021, Byte acquired Pico, a VR hardware company incubated within the microelectronics manufacturer Goertek Group, for nearly 10 billion yuan in a flash, and invested a lot of manpower and traffic. Selling hardware to C-end users; facing growth bottlenecks in the domestic game market and lacking new explosive IPs, Tencent established an XR business line with more than 300 people last April, hoping to catch up with the “next generation Internet” trend.
However, just as Meta finally had to face the reality of the continuous loss of VR equipment, domestic companies that bet on VR hardware equipment also continued to reduce their structure after recognizing that this is a competition that requires a lot of investment and slow results.
Several Tencent XR internal employees confirmed that after the end of last year, they gave up the acquisition of Black Shark, a mobile phone technology company that focuses on gaming and e-sports. After the Spring Festival this year, the entire team began to make major adjustments. “It has not brought any new growth and has been burning money.” , dragging down other businesses of the company. Although the entire XR business line has not been completely disbanded, there is actually only a small part left.” Pico also ushered in adjustments after the Spring Festival: the hardware sales team was abolished from the team of more than 2,000 people, and the sales target for 2023 was directly cut in half compared to the sales target of 1 million units in 2022.
The market is anxiously looking forward to the release of Apple’s first XR head-mounted display product, which has been postponed again and again, hoping to realize the “iPhone miracle” and drive the entire industry into a new round of explosion. But do industry participants and consumers still have the patience?
Playing content is like panning for gold
What is the result of the leading companies scrambling to enter the game? On the second-hand trading platform Xianyu, VR glasses have become “the most dusty electronic products” after running fitness equipment and switch fitness rings.
In fact, there is no fresh and special interactive experience, and it cannot be combined with specific scenes of work, life, and entertainment. At this stage, VR devices can only rely on content, especially VR games, to attract users.
In 2020, Mate began to directly acquire VR game companies to quickly establish a VR ecological closed loop; Pico also pursued this style of play, announcing in September last year that it would search for the first release of VR games around the world, with an estimated investment of more than 12 million US dollars.
Industry insiders believe that the reason why Meta’s own VR equipment can quickly occupy the market is not only the equipment is easy to operate and the price is cheap, but more importantly, the content is “enough”. , This is basically the consensus of hardware manufacturers to open up the market.”
But the problem is that the VR game reserve of domestic leading platforms is far less than that of overseas manufacturers: the three content platforms of Quest already have more than 5,000 applications, and the number of applications on the content platforms of domestic VR equipment leading manufacturers is less than 200.
The production of virtual content itself is scarce and expensive. According to a game outsourcing source from a large company in the southwest region, the production cost of VR content is very high. The game needs to be used in VR, and when it needs to be produced, it has higher performance in various performances such as rendering, display, and anti-shake. Almost no popular games can do this. horizontal.
He told reporters that the current profit model of domestic VR game producers is to put their products on platforms like Pico and earn a share based on the purchase volume. “The quality of current content products is not high and it is normal. Unless investment is attracted, let alone investing more in high-quality content, the company cannot afford it.” It is worth mentioning that there are already more than 200 million-dollar revenue applications in the Meta VR ecosystem.
In addition, considering that the domestic regulators are cautious about games, leading Internet companies are more likely to take the differentiated route of video entertainment, such as aggregating VR content such as film and television dramas, VR concert videos, and sports events into their products. . But now it seems that even if a lot of money is spent on video distribution, it is difficult to find enough consumers to pay the bill.
Domestic mobile phone terminal manufacturers enter the market
However, the development of the XR industry does not allow any shortcoming in the industry chain. Chips need to become more powerful and consume less power. Algorithms such as spatial positioning and environmental perception need to be iterated continuously, and better display technologies, display screens, and optical products are also needed. The most important thing is to form a content ecology in the fields of 2C games and videos, or 2B (enterprise-oriented) industries and education.
”When the metaverse concept was hyped, the biggest beneficiary was actually capital, and the application and commercialization of subdivided industries did not make much substantive progress.” Primary market investor analysis, two waves of VR investment in 2016 and 2021 However, the content ecology of the entire industry has not been built up. Now the companies left by the big waves are doing business on the enterprise side (2B) or government side (2G), and they no longer touch the game industry that requires heavy investment.
Can new technology tools make up for the shortcomings?
Not going well doesn’t mean giving up altogether. If the AIGC technology that is shining today can improve the production efficiency of virtual content, will it bring new opportunities to XR devices?
”Virtual reality, digital twins and other fields already have GPT-based or GPT-like products, and some companies are already using AIGC products to improve content production efficiency. Furthermore, everyone is predicting whether these new technologies may accelerate the construction and improvement A grand scene like the metaverse.” The above-mentioned investor revealed that the person in charge of the game studio he came into contact with calculated that AIGC can reduce the workload of original painters by more than 70% in the game production process, and reduce the workload of modeling engineers by half. This can greatly reduce personnel costs and shorten the development cycle in the game industry that pursues high-quality products.
Therefore, although the market attention has shifted to ChatGPT, there are still investment institutions and enterprises optimistic about the development of XR head-mounted display equipment.
VR equipment manufacturer HTC recently released VIVERSE for Business, a software product for enterprises. The main application scenario is corporate office, which can directly create a virtual collaboration space for employees. The weight has dropped to 126 grams, but the launch time and price of Xiaomi’s product have not been confirmed; Thunderbird Innovation, a consumer-grade AR device company incubated by TCL, also announced in early March that it has completed a round A financing of over 100 million yuan, led by Fosun Capital , Rongyi Investment led the round.
According to the prediction of Technavio, a British technology research and consulting company, by 2025, the XR market size is expected to grow by US$162.71 billion. During the forecast period, the market will accelerate at a compound annual growth rate of 46%. Players who are still sticking here know that all the solutions in the industry today cannot meet the requirements of consumers for product experience, but at the same time they believe that there must be brands in the future that can achieve breakthroughs and activate the entire market. Before that, it is better to “make the hardware first.”