While the world is still immersed in hysteria over the Oculus Rift and HTC Vive, Chinese startup Ling VR plans to launch its all-in-one VR headset with a built-in operating system, which won’t need to be connected to a computer or have a smartphone slotted into it.
All-in-one VR devices, still not part of the mainstream in the U.S. market, has suddenly become a hot concept with Chinese startups. Zhang Shubin, the CEO of Ling VR, an entrepreneur in his mid-30s, told AllChinaTech on Monday that they are going to dominate the Chinese VR market.
Ling VR, a VR headset maker founded in 2014, is located in Northeastern Beijing, where a group of tech companies including Uber China, Meituan and Momo are centering. Ling VR’s team of more than 60 people, 80% of which belong to the R&D department, just secured USD 10 million from Chinese tech giant LeEco at the end of last year.
Last May, it launched a VR headset that connects to phones called BAI, or Little White in English, which costs RMB 199. More than 10,000 were sold in a month on Taobao’s crowdfunding platform. The second product by the company, a wireless all-in-one headset named HEI, or Little Black, is expected to come out in mid-2016 at the earliest, and is still undergoing beta tests.
VR will change the gaming industry
Zhang Shubin, a veteran in the gaming industry, worked up to his post as the director of the Strategic Planning Department at Lianzhong Interactive Network, a Chinese gaming company that’s been around for two decades.
“I started a gaming company before Ling VR. What I learnt from that experience is: this business either makes or breaks you, and even if you make it with one product that’s all the rage, it’s hard to generate a second craze,” said Zhang.
In his eyes, VR is going to reshape the gaming industry.
He says VR will largely be used in entertainment, but is not limited to video games. He says it will partially replace TVs and PCs to provide entertainment.
All-in-one devices suit Chinese consumers better
Like most Chinese VR companies, the startup began with an inexpensive phone case-like VR headset, which according to Zhang, is the first product that most users will buy. “The market needs it to educate users about what VR is and how it feels like to watch things on a VR device.”
Meanwhile, Ling VR’s focus has always been its all-in-one headset, HEI, which has yet to be released.
Zhang’s reason for this is that, compared to American consumers, most Chinese people are not willing to spend a huge amount of money on a bunch of different equipment just to play games.
HEI will be priced around RMB 2000, the price of a mid-range smartphone.
Besides pricing, another challenge for products like HTC Vive in the Chinese market is that Chinese consumers have already gotten used to light, handy devices thanks to the smartphone boom in China, which exposed Chinese users to many lightweight devices.
Then isn’t a headset like the Samsung Gear VR, which simply requires a phone, enough? Zhang dismissed this, saying it’s impossible to design a VR headset that is compatible with all existing types of phones.
Generally speaking, smartphones are not tailor-made for VR headsets. Thus, they might fall short of standards required by VR devices. It might even be necessary to rewrite some of the phone’s code. For instance, the Gear VR software development kit has optimized its graphics processing unit, which is a tweak of the Android system, to operate at a perceived delay of under 20ms.
“In all-in-one devices, we are able to customize both the hardware and software for the best user experience, saving the trouble of dealing with big phone makers for authorization to format the system on their phones.”
HEI, which was originally supposed to be launched last year, still hasn’t hit the market because of ongoing work on performance optimization, Zhang said.
Whoever has a good headset gets the say in content distribution
To build an ecosystem in the VR industry, another key element besides hardware is content. Without a variety of good content to choose from, consumers will simply not buy the device.
“HEI’s delay also has to do with content. Our team is making adaptations on the device with game developers, in order to put better VR games on the devices.”
Zhang says they are not engaged in developing games or video production. “We are concentrating on manufacturing hardware. If someone has good headsets, they will have the say in content distribution,” said Zhang.
Consumers won’t buy a headset without a variety of content built in, no matter how good the device is. Ling VR is cooperating with game developers to source content. They announced this month that they will join hands with Chinese mobile game developer Locojoy to launch a VR game adapted from Locojoy’s signature game “I am MT”, which has more than 100 million users, according to the company.
Speaking of the landscape of content production, Zhang says the competition is going to heat up even more. “You know, the market in China is so huge that it saw RMB 140 billion in revenue in the gaming industry last year. Tencent, who makes 60% of its income from its games, is probably the most active out of the BAT companies marching into VR, especially in terms of providing game content,” said Zhang.
A number startups providing VR game content have mushroomed since the fourth quarter of last year. Zhang says: “mobile phones, on which user interaction is limited to swipe and click, have limited the talents of game developers. It’s a good thing that VR is going to be a true creative outlet for them.”
Any challenge can be solved with strong market demand
If you’ve ever tried a VR headset, your instant reaction might have been that the effect was not as good as you expected. Zhang says it’s true. “Users are pinning too high of an expectation on the VR sector. But it’s only at its preliminary stage,” he added.
Ling VR has already run into problems like chips and batteries.
Many criticize the all-in-one VR device because its processing ability lags behind VR devices that connect to a PC, and this is basically about chips. “Making a chip with bigger processing capability is not that hard. The thing is, it needs the support of a much higher-capacity battery,” Zhang says.
For Zhang, with the strong market demand for using VR in entertainment, all these problems will be solved sooner or later. Ling VR has partnered with domestic chip maker Allwinner Technology to design a chip especially for VR devices. Zhang also says that there are people working on designing a competent battery.
For him, the explosion of VR is just a matter of time. “In two years, the market might consume 30 million to 50 million VR helmets that connect to phones. And in the next three to five years, the VR all-in-one device is going to dominate the market with tens of millions sold yearly,” he said.
Zhang predicts that in three years, this market will grow to tens of billions of yuan. In that time, two or three hardware giants will be splitting the market with a valuation of at least USD five billion each. And according to a prediction from Goldman Sachs, in 2025, the revenue generated in this market may reach USD 80 billion, out of which USD 45 billion could come from hardware sales.
Currently, other competitive players in Chinese market that can be named are BaofengMojing, launched by China’s video streaming platform Baofeng.com, Shanghai-based Deepoon and Shenzhen-based 3Glasses.
“It’s still uncertain who will be the Didi Kuaidi of the VR industry, but let’s wait and see,” Zhang said.
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