China's VR industry turns from making devices to creating content
Virtual reality (VR) is widely considered the next big thing in technology after mobile. The industry has been a hot spot for investment. Over the last two years, VR and augmented reality (AR) companies have received $3.5 billion in venture capital investments. In China, the majority of investment funds have flowed into VR device manufacturing. But the attrition rate has been high. In response, many VR companies have turned away from making devices and have instead focused on creating content for VR users. As of February, Chinese companies had developed 2,700 online videos and 800 games for VR, but none has achieved must-have status.
Big promises have always surrounded virtual reality (VR) technology.
In March, e-commerce giant Alibaba Group Holding established a VR lab to create what it called its next generation of online shopping experience. Meanwhile, Facebook Inc has reportedly been looking into how to use VR to enhance the social networking experience.
VR is widely considered the next big thing in tech after mobile. With a VR headset, which looks like an oversized pair of goggles, the technology can transport the user to another place and time that may or may not actually exist. Imagine putting on a VR headset and finding yourself in the midst of a trench assault during World War I. Such is the promise of VR.
It sounds pretty cool, but experts warned that just because something is cool doesn't mean it will end up being popular, or profitable.
Red-hot investment
There are many companies, venture capitalists and other investors, however, who have bet otherwise. In May 2014, Facebook paid $2 billion to acquire the VR pioneer Oculus, the maker of the Oculus Rift headset.
Then there's Magic Leap, a U.S.-based start-up that has raised $1.4 billion from Google Inc, Alibaba and Warner Bros Entertainment Inc in order to develop a new kind of VR technology.
Zou Shenglong, CEO of Shenzhen Thunder Technologies Co, headed up a group that invested $30 million in Shanghai-based VR start-up Deepoon in December 2015.
VR technology can cultivate several "unicorns" with values of up to $10 billion, Zou said at a press conference in March.
Over the last two years, VR and augmented reality (AR) companies have received 225 venture capital investments worth $3.5 billion, according to a Goldman Sachs report in January.
In the first two months of 2016, investment in VR and AR companies surged 340 percent from the fourth quarter of 2015 to $1.1 billion, data from U.S.-based market consultancy Digi-Capital showed in March.
The Beijing-based market consultancy iResearch said in February that 51.9 percent of the venture capital in China's VR industry has gone into device manufacturing.
Beijing-based market research company Analysys International has projected that China's VR device shipments in 2016 will surge 372 percent in value to 850 million yuan ($129 million).
