The acceleration of technology over the past year has caused a massive ripple effect, permanently shifting consumer lifestyles, expectations, and behaviors to a future-ready state. In response UM APAC created the Asia-Pacific Innovation Annual – taking a deep dive into the cutting-edge advancements in entertainment, commerce, digital health, and connectivity, that are catapulting the region and proving new opportunities for brands.
Ever since the Sensorama device was introduced to the world in the 1960s, the idea of being able to fully immerse oneself into a virtual space has captivated people’s imaginations. By 2015, the year major video platforms such as Baofeng and Youku bet heavily on VR content, virtual reality took hold in China. There were hundreds of startups, device manufacturers, and brands investing in the VR space. Consumers could buy a cardboard VR viewer for as low as $1 on Taobao and immerse themselves in virtual reality content such as 360 videos, games, and tools.
Despite the heavy investment and hype, the VR bubble burst in 2016, and many startups and companies collapsed and withdrew from the market. Overall, there are three key barriers to the mainstream consumer adoption of VR: high prices, uncomfortable experiences, and lack of quality content. These barriers continue to hinder VR from becoming a true media channel with scale.
Although the VR frenzy subsided after 2016, there are still a few major players that continue to innovate and develop as VR has found a second life in enterprise use cases such as product design, commercial events and exhibitions, real estate projects, training, and education.
Pico VR is a leading local VR brand in China. The company was founded as the OEM of VR and augmented reality technology solutions for international brands. It launched the first portable VR headset in 2014 and continued to launch new products every year. However, like many VR manufacturers, it switched its business focus in 2017 to providing professional virtualization services to manufacturers and big brands.
In August, Bytedance, the parent company behind TikTok and Douyin, acquired Pico for about $1.5 billion. Pico will be consolidated with Bytedance’s VR operation. This acquisition will likely help Bytedance explore more consumer-facing use cases in VR.
The VR market and investment continue to grow since 2018, even though the growth rate has been declining. B2B had been the key driver of the VR market boom for many years. However, in 2020, 52% of VR investment in China was for consumer-facing projects, surpassing B2B investment for the first time, according to data from Sai-Di Innovation Research.
Despite the limited audience reach that VR can offer, brands in China has been keen to create engaging and immersive digital experiences through mobile platforms. At the same time, continuous development and technology innovation, along with better and less-expensive VR headsets and devices in the market, have increased consumer interest in the technology.
The COVID-19 pandemic has been a key driver to this transformation. For example, Beike is one of the largest online real estate platforms in China. During the pandemic, it launched an online open house function that allowed the consumer to view properties via VR technology. This function even enabled the salesperson to walk the users through the virtual 3D environment and answer questions through its app.
As part of its 618 Shopping Festival (a la Amazon’s Prime Day) campaign last year, IKEA launched an online virtual store on its T-Mall site, which allowed its customers to virtually browse and shop on its biggest retail store in China. Using 3D scanning technology, IKEA brought the store alive on mobile. This immersive experience allowed customers to visit the retail outlet without leaving their home during the pandemic. This campaign achieved great success and was warmly received by Chinese shoppers as one of the most successful virtual store experiences in 2020.
When the real world converges with virtual space, it creates a new form of interactive space, often referred to as the metaverse. Companies including Facebook, Roblox, and Epic Games see the metaverse as key to the internet’s next phase. The metaverse concept, rooted in science-fiction novels such as “Snow Crash” and “Ready Player One,” encompasses an extensive online world transcending individual tech platforms, where people exist in immersive, shared virtual spaces. Through avatars, people participate in a variety of activities, such as socializing with friends, trying on items available in stores, or attending concerts with friends, just as they would offline.
VR could be an important portal to the burgeoning “metaverse” environments in the future. Although the local examples or building a metaverse have yet to emerge in China, the closest example that matches this concept is WeChat, which is also known as the “super app” that lets consumers tap into different functions in one app. There’s an opportunity for Tencent to integrate WeChat into its mobile games as a cross-app communication tool. As our physical world converges with the virtual realm, Tencent’s sprawling portifolio of games and chat apps could potentially become the largest metaverse in the world.
While there has been discussion about how VR could revolutionize marketing and digital experiences, it is still at the stage of trial and error. We have yet to see a killer headset or app that enables mass adoption of virtual reality in China. While waiting for VR technology to catch up, brands should explore mobile interactive content as a way to engage consumers in the virtual world.
