Luo Yonghao is stirring up XR, is the big factory in a hurry?

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Author | Edited by Wang Min | Xiang Xiaoyuan

Source: Shenran (ID: shenrancaijing)

In the past month or so, the XR market has been particularly lively.

Following the announcement of full-scale entry into AR on June 13, on July 10, Luo Yonghao officially announced the name of the AR startup as Thin Red Line in the Make a Friend live broadcast room. The company is preparing to recruit people, mainly recruiting product managers and designers.

When the AR market is widely concerned because of Luo Yonghao, many Internet manufacturers are also accelerating their deployment in the XR field. In the past June, Byte and Tencent’s new actions in the XR field have appeared in front of the public. Byte bought a virtual social company to develop VR social, and Tencent’s XR business unit also surfaced.

Since 2022, although the popularity of the metaverse concept is declining, the statement that the metaverse is the next generation of the Internet has almost become a consensus. And XR, which is the entrance to the metaverse, has become a window for big manufacturers to strive to seize this next-generation market. In the first half of this year, shrinking layoffs is the key word for big Internet companies, but the XR department, instead of laying off employees, is recruiting.

XR stands for Extended Reality, which is a general term for AR (Augmented Reality), VR (Virtual Reality), MR (Mixed Reality) and other technologies.

Specifically, most of the actions of domestic and foreign manufacturers are concentrated in the VR field. Because VR has already been used in video and game fields, “VR has been applied in real life, especially in overseas markets,” said a practitioner in the VR field. The Quest 2 launched by Meta, a major foreign manufacturer, sold more than 10 million units last year, accounting for more than 80% of the global market. The sales volume of a single brand has exceeded 10 million, which is considered by many industry insiders to be the inflection point of VR towards application.

However, the predicament in the VR field lies in the need to improve the basic user experience of hardware products and the lack of content ecology. The entry of major manufacturers means that the investment of capital and resources will enrich the VR content ecosystem, and the VR all-in-one machine has also entered the stage of competition for capital. in the track,” said an industry insider.

In contrast, the current actions of big manufacturers in AR are much more low-key. However, some people in the industry have great hopes for it, saying that it is currently only limited by engineering technology, so it is only used more on the B side.

How the big manufacturers who are running and entering the market can stir up the XR market is a question that all industry people are concerned about.

Layout XR, what is the route of the big factories?

Running into XR, the big manufacturers collectively start with VR, and each has its own way.

Byte continues the strategy of “buy, buy, buy”. After acquiring the team, it will take the formed products to market; Tencent will not complete the acquisition, but will go out and develop its own; Although Baidu does not make its own hardware, its “little brother” iQiyi has incubated VR products. gain a foothold in the market.

In the past year, ByteDance has made continuous moves in the VR field.

In August last year, Byte acquired Pico, the leading manufacturer of the domestic VR industry, for 9 billion yuan. Since then, Pico has started the acceleration mode. In terms of online marketing, it has obtained traffic resources from the byte ecology, including Douyin open-screen advertisements and other channels, and has also placed advertisements on Weibo, Xiaohongshu and even long video variety shows. Offline, it is reported that Pico has opened nearly 200 stores across the country.

Not only that, Pico is also accelerating its deployment in overseas markets. The Pico Neo 3 Link, the overseas version of Pico’s consumer-grade VR, has entered the United Kingdom, Germany, France, Japan, South Korea and other countries.

With the support of various resources, according to multiple media reports, Byte has increased the sales target of PicoVR products in 2022 from 1 million units to about 1.8 million units.

While promoting the popularization of VR hardware and grabbing the market, Pico is also accelerating the construction of VR content ecology. Since this year, Pico has brought virtual idols, concerts, 3D classic movies and other content to the VR scene. On the evening of July 2, singer Wang Feng also held a concert in the VR world in Pico.

“The current VR applications still belong to entertainment consumer electronics products.” A practitioner in the VR field commented. Behind this, VR has been applied to scenes such as video viewing and games.

Recently, ByteDance also acquired a VR company for tens of millions of yuan to deploy VR social networking. According to Tianyancha, the company is a virtual social company Beijing Wave Particle Technology Co., Ltd., and its flagship product is “Vyou Weiyou”.

Byte horsepower is fully open, and other big manufacturers are not to be outdone. Tencent is the representative of accelerated layout.

In the vision of Tencent founder Ma Huateng, “the mobile Internet has been developed for ten years and is about to usher in the next wave of upgrades, which we call the true Internet.” The XR business is an important step for Tencent to realize the true Internet. As early as 2018, Tencent demonstrated its first VR headset in China.

In June this year, Tencent announced the establishment of the XR department, which is affiliated to IEG (Interactive Entertainment Division). , content, system, tool SDK, hardware and other links are actively trying to create industry benchmark VR products and experiences.

In addition to the strong investment of these two major manufacturers, Baidu also launched the C-end-oriented VR social product “Xi Rong” at the end of last year. Ma Jie, vice president of Baidu in charge of Xiyang, bluntly told the media, “There are still many regrets in the user experience.” However, Baidu-owned iQiyi, the VR brand Dream Bloom (formerly iQIYI Intelligence), which has been incubating in-house since 2016, has launched the VR all-in-one adventure VR series.

From the perspective of shipments, on June 30, IDC released the VR market report for the first quarter of 2022, showing that China shipped 257,000 VR headsets, a year-on-year increase of 14.8%, of which all-in-one VR shipped 228,000 units, accounting for To 88.9% of the overall VR shipments, Byte’s Pico Neo3 and iQiyi’s VR products Qiyu Dream and Qiyu 3 are the top three product models shipped in the consumer market.

According to the Wellsenn XR report, the global shipment of Pico in the first quarter of 2022 is about 170,000 units, with a market share of about 6.18%. The global shipment of iQiyi’s VR products is about 23,000 units, with a market share of about 0.84%.

At present, major manufacturers have formed a basic idea for the layout of VR, which is to accelerate the enrichment of content ecology on the basis of polishing hardware products. However, the AR field is still in the investment stage, and it is far less high-profile than VR.

In the first half of this year, Tencent, Ali, and Byte have all invested in the field of AR glasses. Among them, in January, the virtual human Li Weike team invested by ByteDance will launch AR glasses; in March, Tencent invested in AR glasses manufacturer Honeycomb Technology; in April, Ali led the investment in AR glasses manufacturer Nreal.

In June of this year, Tan Ping, head of the XR laboratory of Ali Dharma Academy, pointed out in his speech that “the XR Internet is still in a very early stage, and there are still many factors that are difficult to predict accurately.”

In addition, mobile phone manufacturers such as Huawei, Xiaomi, and OPPO have actually started to get involved in the XR field two or three years ago, especially the research and development of smart glasses. Among them, Huawei’s smart glasses released last year can be used to listen to songs, answer calls, etc.; Xiaomi released a VR headset in 2018, and released a concept video of smart glasses in September last year; OPPO launched OPPO in March this year. Air Glass, “superimposed display” by superimposing a screen in front of the glasses, supports functions such as weather reminders and real-time translation.

These products of mobile phone manufacturers are currently in the stage of smart glasses, not AR glasses in the true sense. However, Huawei and OPPO have recently released AR smart glasses patents, and it seems that they intend to continue to cultivate.

The big manufacturers attach importance to VR and neglect AR because AR is not yet a C-end business. Relevant reports show that in the first quarter of 2022, the overall global AR terminal hardware is still dominated by the B-end, and the C-end market has not yet exploded.

Who is doing XR in the big factory?

Along with the business layout, the XR teams of various major factories have also surfaced.

According to public information, after Pico was acquired by Byte, the original founder Zhou Hongwei was still in charge, and the team size has now exceeded 1,000 people; Tencent’s XR business line is affiliated to the IEG business unit, with Ma Xiaoyi as the general manager, and the team began to work internally at the beginning of the year. Huoshui recruits, the overall scale is about 300; the person in charge of Baidu VR product Xiyang is Vice President Ma Jie, and the CEO of iQIYI-incubated VR company Dream Bloom is Xiong Wen, who worked for Lenovo Group and joined iQIYI in 2016 to be in charge Hardware research and development, and only after that did the Adventure VR series.

In the first half of this year, the XR field is hot, and the recruitment intensity of talents in the VR field is significantly higher than the previous two years.

Zhang Rui, a VR game developer, received calls from seven or eight headhunters in the first half of this year. Not only him, but also his friends in the mobile game circle are favored by headhunters. “I can feel that there is a shortage of people in the VR industry now, and there is a shortage of people at all levels of content, market, and technology,” said Zhang Rui, “Everyone in the field of mobile games and PC games knows that the original track has almost no development opportunities. Now, VR still has potential.”

In this wave of recruitment expansion, the representative company of high salary grabbing people is Byte. In addition to large-scale recruitment, there are also people who transfer from within. According to LatePost, the head of Watermelon Video, Ren Lifeng, head of Douyin Variety Show Song Binghua, and Douyin Entertainment Director Wu Zuomin have successively transferred to the VR product department. Some Internet practitioners have pointed out that the opportunities for byte growth may mainly lie in Pico and TikTok in the future. Under the wave of layoffs by major Internet companies, the Pico department is relatively “safe”, so many people turn over from the inside.

Byte’s “recruitment-style acquisitions” have not stopped. The acquisition of Wave Particle Technology with more than 50 people and the deployment of VR social networking are one of the examples. In addition, at the same time as the acquisition of Pico, Byte also gained a team of 100 people and expanded it. According to reports, before the acquisition, the original Pico team had reached 300 people, and by the end of 2021, the Pico team had exceeded 1,000 people.

Relying on recruiting and robbing people, internal transfer, and recruitment-style acquisitions, Byte has quickly built up a large team. Chen Peng, a practitioner in the VR field, told Shen Ran that before 2021, the VR field will be in a cold winter, and a large number of VR/AR startups have collapsed due to financing difficulties. Most of the surviving startups have teams of only one or two hundred people.

Another big company that is accelerating its layout, Tencent, is also making frequent moves.

It is not that Tencent has thought about making up for the shortcomings of VR hardware in the form of acquisitions. According to 36Kr report, at the beginning of Pico’s acquisition, Tencent also participated in the bidding. After the unsuccessful acquisition of Pico, it was reported that Tencent’s target turned to Black Shark, but it was unsuccessful.

Today, Tencent seems to have turned its attention to self-developed products. Industry insider Jez Corden claimed in a podcast that Tencent is developing its own VR headset. Ma Xiaoyi said that “the whole chain of VR products should be laid out”, which also proved this point. In addition to self-developed hardware, according to relevant news, the XR department is in charge of NExT Studio general manager Shen Li, and it is also to give full play to Tencent’s strengths in game content.

A VR practitioner told Shen Ran that if Tencent conducts hardware self-research, the pace may be a step slower than other big players such as Byte, but Tencent has explored VR hardware research and development, and it has been in the mobile game era. “Later attack”, relying on operation and experience to become the final winner, and it is possible to catch up later. Moreover, compared with acquisitions, self-research does not have the problem of team integration.

The VR team incubated by iQIYI has survived the winter of the VR industry and has become one of the important players, but its expansion moves are not as high-profile as Tencent and Byte.

In the AR field, where the technology is far from mature, the layout and recruitment of large factories are not radical. “At present, from the perspective of the industry, many terminal brands have made VR products and then made AR plans. Except for large factories with sufficient funds, it is difficult to do both.” Chen Peng said.

Regardless of the size of the team, domestic manufacturers have been making small innovations in the XR field. According to incomplete statistics, in 2022, four manufacturers, Huawei, Xiaomi, OPPO, and vivo, have announced more than a dozen VR/AR-related patents, involving VR/AR basic technology, appearance design, optical display and other fields.

The long journey has just begun

It is not difficult to understand that large manufacturers with strong financial strength and abundant resources will run into XR and prefer VR.

“At present, the C-end VR products concentrated by major manufacturers are basically following the path that Meta has verified.” Chen Peng said. When successful cases have already appeared in the market, the explosive power shown by the big manufacturers will be relatively strong. They have the capital to subsidize users wildly, and they also have sufficient budget to purchase content.

Taking Pico as an example, adjusting the target and reducing the price is obviously burning money to grab the market. Chen Peng pointed out that during 618, Pico launched a half-price discount and 1799 yuan to buy products. This price is cheaper than that of many offline dealers. It must be selling one and losing one.

Big factories burn money to sell hardware, which is actually paving the way for future users to pay for software. “In the field of VR, the dividends of the software application layer are coming.” Chen Peng judged that in recent years, VR will likely remain in the form of special equipment. closed ecology.

As Neo, an executive of Dapeng VR, said, it is difficult to say that large-scale and substantial progress can be made without tens of billions of investment and years of accumulation in the current market for C-end VR all-in-one products.

Although Pico’s team size and investment are not small in China, it is still insignificant compared to Meta. According to data, Meta has a team of 58,604 people at the beginning of 2021, of which the AR/VR department accounts for about 17% of the entire company, with nearly 10,000 people. Neo pointed out that Meta has invested heavily for at least five years before Meta Quest 2 sells more than 10 million units in 2021. From 2019 to 2021 alone, Meta lost over $21 billion.

The lack of content and talent is the biggest problem in the domestic VR industry.

Although Zhang Rui received many calls from headhunters, he still did not choose to join the big factory in the end. In his opinion, Pico’s VR ecosystem is relatively early compared to the Meta Quest content platform, and has not fully opened up a closed-loop link for developers to make profits. Therefore, when developing VR games by himself, he is still focusing on overseas platforms.

In other words, there is no mature VR ecosystem in China, nor a mature publishing platform, and it is difficult for practitioners to obtain sufficient income from content research and development. Therefore, such practitioners are still very few.

Tan Yiguo, president of Shenzhen Virtual Reality Industry Federation, said last year that the biggest pain point of VR is the extreme lack of application and content resources. The shortage of content is due to the lack of industry talents. According to statistics, the demand for talents in China’s VR industry accounts for as high as 18%, but the supply only accounts for 2% of the world’s total. The shortage of VR talents in my country is expected to exceed 1 million, which is far from meeting the employment needs of enterprises in the industry for technical skills.

On the other hand, AR has a longer way to go. Neo pointed out that VR already has certain application scenarios, such as immersive games and live broadcasts, and social elements will be added in the future. Many industry insiders regard AR as the next-generation computing platform. Under the current development state, A relatively mature scenario for large-scale application has not yet been found.

When Luo Yonghao started AR and started his business again, he also said that he would give himself a long period of three to five years, pull a team of hundreds to thousands of people, and completely write the built-in software and a large number of low-level design and refactored operating systems, even if the Laggards catch up, and it will take at least one year to complete.

But at the moment, the big domestic manufacturers obviously can’t stop grabbing market awareness. In addition to Meta, the opponent may also have Apple. Apple has been developing products in the XR field for many years, and it is reported that products are expected to be launched in January 2023.

“In this emerging market, the pressure of big manufacturers is not small, and they have to invest money and people.” A VR practitioner said with emotion.

*The title picture and the pictures in the text are from unsplash. At the request of the interviewee, Zhang Rui, Chen Peng, and Neo are pseudonyms in the article.

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