Tech Facebook and Xiaomi take on China's VR market (FB)

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Facebook’s virtual reality (VR) arm Oculus is joining forces with Chinese device maker Xiaomi to build a standalone VR headset.

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(BI Intelligence)
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Facebook’s virtual reality (VR) arm Oculus is joining forces with Chinese device maker Xiaomi to build a standalone VR headset targeted exclusively toward the Chinese market, Oculus announced at CES.

The new device, dubbed Mi VR Standalone, is an all-in-one headset, meaning it doesn’t need to be tethered to a computer or paired with a smartphone to power the VR experience. Stand-alone VR headsets make VR technology more accessible for the average consumer, as they don't require additional hardware to use the technology, effectively lowering the barrier to entry for broader adoption of VR. Facebook and Xiaomi are also teaming up on the upcoming Oculus Go stand-alone headset, which is expected to be released globally in 2018 at a price point of $199.

Facebook’s partnership with Xiaomi will help Oculus gain footing in China:

  • Xiaomi’s brand recognition in its home market will drive awareness of the Oculus platform. Facebook was blocked in China in 2009 and consequently only has a small footprint in the region, while Xiaomi is the country’s fourth-largest smartphone brand. The Mi VR Standalone will support both the Oculus Mobile SDK and the Mi VR SDK.Already, Xiaomi is teaming up with existing Oculus developers to localize leading content from the Oculus Store so developers can bring it to the Mi VR Store in China.
  • Via the partnership, Facebook will be in compliance with some of China’s strict regulations. China often requires foreign companies to forge partnerships with Chinese firms in order to push their products in its domestic market. Since Facebook and its family of apps are blocked in China, partnering with Xiaomi could help Oculus secure a position in China’s VR market.

China is the fastest-growing VR market globally, making it attractive to companies. VR headsets shipments in China increased 87% last year to hit 1.1 million units, according to IDC. For context, VR headset shipments in the US grew just 11%. HTC Vive Vice President Raymond Pao highlighted this sentiment, explaining how China is where VR is likely to gain mass adoption first.

But China’s VR market also has a robust and fragmented VR ecosystem in place already, which could make it challenging to gain footing in. There are currently over 400 VR headset manufacturers in China, and numerous different app stores, APIs, and accessories. This fragmented market makes it difficult for VR developers to create content accessible across the VR landscape. The expected low entry price of the new Mi VR Standalone device, along with the ability for developers worldwide to easily push out new VR content into the Mi VR store for the Chinese market, could ease the fragmentation in China’s VR market.

Facebook could propagate Oculus as a globally dominant VR platform by winning over the Chinese market with the help of Xiaomi if it can stave off competition on the higher end and convert China’s lower-end VR user segment. HTC is launching a $600 stand-alone VR headset exclusively in China in January that could win the higher end of the market.

On the lower end, there’s a massive market in place for cheap mobile VR headsets in China; Alibaba-owned online marketplace T-Mall said the majority of the 300,000 mobile VR headsets purchased on the site cost less than 30 yuan (USD $4.40). Facebook’s partnership with Xiaomi could help generate a more robust VR content library for Oculus, and effectively drive uptake of the Mi VR headset in China.

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