China is warming up to VR, but big tech firms have yet to make a move

All the hype around virtual reality (VR) is starting to rub off on me. Like most people, I was skeptical of the Oculus Rift as a mass consumer product when it surfaced on Kickstarter. When Google unveiled Cardboard, the open-source DIY headset that uses a smartphone as the display, I thought it was some sort of April Fool’s joke.

Later I found out it wasn’t. Two weeks ago, I bought a Cardboard kit off of Taobao, China’s most popular C2C marketplace, for just 10 yuan (US$1.60).

After Kickstarter and a US$75 million series B round, Facebook went on to acquire Oculus for US$2 billion. Microsoft teased its own concept of virtual and augmented reality with HoloLens, and there are rumors of an Xbox One VR headset. In Asia, big-name consumer electronics brands are launching their own headsets. Sony has project Morpheus in Japan, Samsung has Gear VR in Korea, and HTC is working with Valve to build the Vive in Taiwan.

In these markets, a VR ecosystem is starting to take shape. Content creators for VR platforms are popping up in the form of 3D video games, immersive media, and interactive storytelling. The big companies are underlined by an army of cheap imitators and young upstarts looking to gain a foothold in this fast-emerging space.

And then there’s China

In the last week or so, I contacted the country’s biggest and most influential consumer tech companies – Baidu, Alibaba, Tencent, and Xiaomi, collectively refered to as “BATX” by some in China – to ask what they were up to on the VR front. None of them had anything to share. Only Baidu made a mention that it was even “exploring” the possibilities.

Denying a reporter comment doesn’t necessarily mean they are ignoring VR, but I got a sense that China’s leading tech companies aren’t taking it very seriously. At least not yet. And for a country that’s trying so very hard to get out ahead of its western competition instead of following in its footsteps, it could be a costly delay.

A handful of startups have stepped up to fill the gap in China. ANTVR, Three Glasses, and eMAX are among the handful of young Chinese hardware companies making headsets. Their products, however, are designed to adapt non-VR content onto the headset display, whereas Oculus provides a developer SDK to create content tailor-made for its platform.

In July last year, Oculus was forced to suspend sales of its development kit in China. Shady vendors were buying up the headsets – meant to be used for developers to create content, games, and applications – and reselling them as a consumer product at a high markup.

So the demand is growing. It’s odd that BATX hasn’t stepped up to lead the VR charge in China, as they are usually extremely quick to jump on new trends: social payments, internet of things, wearables, augmented reality, etc.

Who will pull the trigger first?

Baidu is actively developing augmented reality (AR) applications a la its Google Glass competitor, Baidu Eye. But since Google ended sales of Glass, it would seem AR currently has far less reach than VR. Making the jump from AR to VR doesn’t seem out of the question, but Baidu is biding its time.

Xiaomi is rumored to be building a headset similar to Samsung Gear, in which the user slots a smartphone in front of his or her face for a similar experience to Google Cardboard. With its hardware pedigree, Xiaomi seems well-suited to enter the VR field, or at least adopting an existing VR company into its ecosystem. For now, however, Xiaomi remains silent on the subject.

Tencent, with its strong background in gaming, also seems a likely candidate, but its lips are sealed, too. One of VR’s primary use cases is gaming, and several game studios in China have quietly begun development. Most notably, Perfect World, one of China’s biggest gaming juggernauts, says it has started working on VR games. The audience is still too small in China, however, for game makers to divert significant resources into it.

Finally, there’s Alibaba, which has recently made its own forays into gaming and entertainment as it tries to diversify its revenue streams beyond ecommerce. Alibaba also has the advantage of running the two biggest ecommerce sites in the country, Taobao and Tmall. An Alibaba spokesperson initially told me the company had “some collaboration in the area of VR,” but later changed its mind about talking about it.