The "oasis" created by XR is the foreseeable future, but the current software and hardware technology proves that "the future is not yet here", which depends not only on the investment in technology research and development, but also on the enthusiasm of creators, but in the short term, we can only imagine the future with the help of science fiction movies.
Wen Wang Yadi Shi Dan.
id | bmr2004
In the sci-fi movie "Ready Player One", director Spielberg presents us with a sample of the metaverse - Oasis. In the "Oasis", people can escape the cruelty of the real world and turn to the virtual space for socializing, entertainment, creation, love and other activities. However, it is a pity that after experiencing the concept explosion period, the cooled down "metaverse" has not ushered in more leapfrog development.
Recently, in response to rumors such as "business shutdown" and "80% layoffs", PICO, an XR brand under ByteDance, also admitted that the company has adjusted its organizational structure, and short-term investment and related team size will be reduced, involving more than 300 employees, accounting for about 23% of the total. It has only been two years since it was acquired by ByteDance, and PICO has embarked on a contraction strategy. According to IDC data, global XR headset shipments fell for the fourth consecutive quarter in the second quarter of 2023, with shipments down 44% year-on-year6%；XR headset sales have regressed significantly in 2023, with 8.5 million units expected to be shipped, only slightly higher than in 2017.
The VR market has declined as a whole, but the AR industry has ushered in multiple rounds of financing, including not only AR equipment players such as Thunderbird Innovation and Rokid, but also metaverse intelligent operation platforms in offline real spaces such as Weixiang Space-Time. Fan Xiao, CEO of Shanghai Weixiang Technology Co., Ltd. (hereinafter referred to as "Weixiang Technology"), revealed to the reporter of "Business School" that the company's operating income in 2023 has reached the level of 10 million.
Does the abandonment of XR headsets mean that these giants no longer believe in virtual reality technology? Why are XR and AR going both ways? The XR industry, which is still in the early stages of discovery, faces many challenges, and "the future is yet to come".
Seven years of "two springs", XR returned to calm
XR (Extended Reality) is an umbrella term for immersive technologies such as VR (Virtual Reality), AR (Augmented Reality), and MR (Mixed Reality). Fan Xiao pointed out that VR is a complete reshaping of a world, allowing users to experience more and more real and rich in the virtual world, extracting it from real life; AR is based on the real space, pasting information, content, and interaction into the real space, so that users can live better in the real space and understand the real space better.
In 2016, Pokémon GO (PMGO), a mobile game based on "LBS (location-based service) + AR" technology, was released, which instantly ignited the enthusiasm of Pokémon fans around the world, who went out of their homes and used the camera on their phones to capture pokemon in the real world. This phenomenal game has changed the way game developers think, connecting the scenes between the online virtual world and the offline real world, and building a new way of scene socialization. Various Internet companies have seen the interactive charm of "LBS+AR" and have used this method to develop new scenes and new games.
The mobile game with "LBS+AR" technology has not created another "PMGO" in China, but it has popularized the concept of AR and enriched the interactive gameplay of the Internet world. During the Spring Festival in 2017, Alipay and QQ launched the "LBS+AR Red Envelopes from the Sky", in addition to users can send AR real red envelopes to each other, so as to strengthen offline communication, merchants can also use real red envelopes to increase interaction with users at the special time of the Spring Festival.
At that time, HTC spent $1.1 billion to Google for its mobile phone manufacturing business, focusing more on the VR AR field, and Google launched the second-generation VR platform Daydream. The launch of the platform and the development of various standards demonstrate Google's VR strategy, which relies on the huge number of Android mobile devices to drive the development of mobile VR devices.
However, in the domestic market, the development of XR did not usher in a large-scale explosion after the game cooled down, and Google Daydream also went into decline in the second half of 2019. In 2021, with Zuckerberg's renaming of Facebook to "Meta", the concept of "metaverse" was rapidly hyped, and China ushered in the "spring" of XR development.
In this "first year of the metaverse", the first domestic metaverse product "Xirang" was released; Tencent proposed the True Internet and established the XR department of Tencent's extended reality business line, including software and hardware; Alibaba established a wholly-owned subsidiary, "Yuanjing Shengsheng", and applied for the registration of trademarks such as "Alibaba Metaverse" and "*Metaverse"; Luo Yonghao started a new AR project, Thin Red Line (Thin Red Line Technology), and quickly completed an angel round of financing of nearly $5 million.
It is worth mentioning that in September 2021, ByteDance contributed to the largest acquisition in the domestic VR industry, acquiring PICO, a VR all-in-one machine manufacturer, for more than 9 billion yuan. At that time, IDC data showed that PICO accounted for 41% of the domestic VR market share in 2021, ranking first.
In September 2022, after the acquisition, PICO released its first new product, the PICO 4 series. PICO founder Zhou Hongwei ** PICO 4 sales will exceed 1 million units in the future.
Different from the path of "heavy games" of foreign VR manufacturers, PICO takes the road of "light games, heavy video and audio", trying to jump out of the inertia of the VR industry around game development content, and take advantage of Douyin's short ** and live broadcast to do a lot of celebrity live content. For example, at the 2022 Qatar World Cup, PICO used the broadcast rights of Douyin to become one of the few manufacturers in China to provide users with a VR viewing experience. PICO has also produced or introduced VR audio and video content, and launched celebrity VR concerts and a number of VR interactive documentaries. But PICO's differentiated route didn't bring the vision of 1 million units. In February 2023, PICO voluntarily lowered its full-year sales target for 2023 to around 500,000 units, which is about 50% lower than the previous target. As of now, PICO has not released sales data for 2023, but according to IDC data, in the first half of 2023, China's VR device sales will only be 260,000 units, a year-on-year decline of 533%, based on which it is speculated that PICO sales are not ideal.
On November 8, 2023, PICO announced on its official Weibo that it would adjust its organizational structure and start a downsizing plan, which confirmed its difficult development situation. PICO said that the adjustment will not affect consumers' purchase and experience of PICO products.
In the past two years, from heavy investment to retreat, PICO has not brought more surprises, Meta, Microsoft, Tencent, iQiyi, etc. have all contracted the VR business and turned to hot artificial intelligence. After the hustle and bustle, XR returned to calm, and behind this was the helplessness of "having more than enough heart but not enough strength".
VR has become a geek equipment, and it is difficult to break the shortcomings of content
Interestingly, while manufacturers are frequently retreating, Apple has brought a new round of impact, wanting to launch the headset Vision Pro in 2024. However, from its about 2Judging from the price of 50,000 yuan, it has become a geek equipment, and it is still far from large-scale civilian popularization.
Zhang Shule, an analyst of the Internet industry, told the reporter of "Business School" that Apple launched Vision Pro not to seize the headset market, but to establish a new operating system to realize the cross-screen operation of Apple's various products, which gives content from another level, plus Apple's own layout in content (games, tool applications to film and television entertainment), while in China, hardware first, software is general, content is missing, and the consumption paradox of "headset devices but no scenes" is very obvious. At this stage, VR application scenarios are mainly focused on games, such as "Half-Life Alex", "Resident Evil 4 VR Edition", etc., and there are also a small number of ** and live broadcast applications, but they have not yet reproduced phenomenal games like "PMGO". According to Omdia, the global VR content market revenue is expected to be $3.1 billion in 2022, of which VR games account for about 89% of the revenue.
PICO has tried to expand the content ecosystem, such as encouraging anchors to settle in VR live broadcasts, encouraging MCN institutions to let more influencers settle in, and opening Douyin and VR dual platform live broadcasts. In terms of audio-visual content, PICO's content is still very limited, and you can only see some Taiwanese dramas and Douyin's self-made variety shows, such as the drama "The Right Way in the World" and "Wind and Dust Tears", and the popular variety show "Yi Guo Hui" and "Like! Got Talent" and so on. In September 2023, according to PICO's official disclosure, there are 50 apps in the PICO App Store** with more than 100,000 apps, 180 apps with revenue of more than 100,000 yuan, and the annual income of head developers reaching 8 million yuan. As a new hardware platform, there is a significant gap between Android and Apple app developers.
What's more noteworthy is that content other than games has not established substitutability, and almost all content with headsets** can be completed with other hardware devices, and the current headset products can be uncomfortable to wear for too long, which also reduces the user's experience.
Zhang Shule believes that the equipment ecology cannot be lightweight, and portability will still bring users a strong uncomfortable experience, coupled with expensive ** and poor content resources, so that XR as a whole has become a geek equipment. To really break through, the core is still content. In addition, XR's various limitations on equipment, its emphasis on consumer grade, lack of industrial-grade market exploration and application scenarios, and other drawbacks make it only "look beautiful", but it is a "blue ocean" that cannot be leveraged.
Without content resources to support hardware, it is difficult to bring considerable sales, and it is difficult to persist in the long term due to the long return on investment.
After the acquisition of PICO, ByteDance visibly spent a lot of money to attract traffic and do marketing for it. According to statistics, during the Spring Festival holiday in 2022 alone, ByteDance gave PICO more than 11 omni-channel **300 million people. However, in the case of hardware and technical problems that have not been solved, it is difficult to form a scale effect in heavy marketing. Wearing comfort is the key to affecting the user experience, lightweight research and development requires time and money, for every 1 gram of equipment weight reduction, manufacturers may have to pay tens of millions or even hundreds of millions of yuan in research and development costs.
It is reported that in 2022, Meta Labs Reality Labs has lost $13.7 billion in R&D investment in AR VR. Although in June 2023, Meta released a new generation of its headset flagship device, the Meta Quest 3, shipments have skyrocketed**. Ming-Chi Kuo, an analyst at Tianfeng**, said that Meta has lowered its shipment forecast for the Quest 3 headset by 5% and 10% in the fourth quarter of 2023, and the shipment volume in the first quarter of 2024 will show a huge sequential decline of 70% to 80%.
PICO admits that the XR industry is still in the early stage of exploration, and PICO is also facing many challenges in terms of product experience, user habits, and ecological construction. The development of XR will not be achieved overnight, and PICO will continue to work hard and strengthen investment in product research and development and core technology capacity building.
AR funding continues, and there are still stories to tell
Unlike the general contraction of the VR business, the AR track has recently received continuous financing, which has injected a shot in the arm for the future development of XR.
A number of companies in the AR glasses industry have completed the latest round of financing, involving AR glasses, AR display modules, optical waveguide devices, etc. For example, in March 2023, Thunderbird Innovation completed Series A financing, with a total amount of more than 100 million yuan, making it one of the companies with the highest amount of first round of financing in the AR industry; In April, Rokid received an investment of 100 million yuan from Jiangxi Yingtan Yujiang District Industrial Investment Group; In August, Li Weike Technology completed tens of millions of yuan in Series A financing; In October, Li Hongwei, CEO of Thunderbird Innovation, once again revealed that it had received tens of millions of financing in the A+ round.
The application scenarios of AR headsets mainly include military, industrial, consumer and other scenarios, with brands such as Microsoft, Realwear, and Epson mainly facing military applications, while domestic brands such as NREAL, Rokid, and Thunderbird Innovation are mainly used in consumption scenarios. According to Debang**, from 2016 to 2022, global AR headset shipments increased from 70,000 units to 450,000 units, with a compound annual growth rate of 365%。Among them, China's AR sales in 2022 will exceed 100,000 units. The reason why it is different from the development of VR is that AR is more portable and practical, and the application scenarios are more extensive. As Li Hongwei said, "AR can bring imagination into reality, make space more intelligent, build a real generalized Internet, and bring a new revolution to people's production and life." ”
Not only consumer-level manufacturers have received financing, but Weixiang Space-Time, which relies on AR technology and is committed to building a city-level metaverse space, has received two rounds of financing in 2023, with two rounds of financing amounting to tens of millions.
Fan Xiao said that the release of Apple Vision Pro popularized the concept of "spatial computing", which is exactly what Weixiang Time and Space has been doing. Spatial computing can be simply understood as allowing machines to read space and interact with real and spatial technology, which is actually an accurate fusion of real space and digital content. From the perspective of the construction of physical space, many offline scenarios are looking for a second growth curve, but the expansion of offline space is limited, and it also needs to spend a certain cost, it is impossible to rebuild a building, and the space and scenarios with very commercial value are very limited.
Therefore, Fan Xiao believes that space needs to be made smart in a more intelligent way, so as to create a smart space. Previously, concepts such as smart cities and smart blocks have emerged in offline space intelligence, but when interacting with ordinary consumers, everyone does not have an obvious sense of experience. AR technology can actually allow people to interact with the real space, and use digital methods to link them, such as the application of digital humans, you can find a digital person next to you when you lift your mobile phone, which can transform different roles and take users to different places.
AR is a scene that seeks to integrate with the real environment, and there are more enterprise-level B-end scenarios to explore, which has also become one of the factors that move towards a different fate from VR. The use of AR technology can empower enterprise applications, and a large number of mature cases have been implemented in the fields of industry, medical care, education, and cultural tourism.
Taking Weixiang Spacetime as an example, it has completed the "1+5" layout, that is, 1 platform and 5 application scenarios (consumption, cultural tourism, marketing, education, and government affairs). For example, Fan Xiao said that the company has landed in Chengdu Chunxi Road Commercial Street, and the number of APPs on mobile phones and tablets has reached more than 100,000 in the past few months, and the user interaction experience has reached millions of times. In addition, the project has also reached a cooperation with Thunderbird Innovation, which will provide consumers with the option of using XR and AR glasses to experience the metaverse space in the form of equipment rental or sales in the future.
The future will come, XR is waiting to explode
Although games are one of the important entrances to popularize technology, the application of VR in other scenarios has shown potential, involving production, consumption, education, medical care and other fields.
Fan Xiao pointed out that in addition to cultural tourism, consumption and other scenarios, the opportunities for campus space are relatively large. Because young people are more receptive and adoptive of new technologies, the space is fixed and everyone is there every day, if you make some content or interaction, it will be much higher in terms of repurchase or user life. At the same time, there are many scenarios of life, learning, and practice on campus to explore, and the smart campus is also a project that is being explored by Weixiang Time and Space.
It is important to face up to the fact that although the XR industry has potential in many fields, the technology is not yet mature, and at this stage, consumer-oriented related products have not yet been widely popularized. The key technologies of VR include near-eye display, rendering processing, etc., although there is a clear development route, but the gradual maturity of the technology still depends on the user experience. AR technology has good development in multi-channel interaction and network transmission, but it is more complex in SLAM algorithm (synchronous localization and mapping) and its related peripherals and optical display, both of which have their own R&D challenges.
Fan Xiao said that there may not be pure VR now, more MR, which uses GoFlow technology, that is, the real controls are collected through the camera, and then the real images and digital images are put together by hybrid rendering, and then rendered and projected on the screen, its problem is that it has high requirements for rendering capabilities. Pure AR is to directly superimpose digital information on the lens, the difficulty lies in the high requirements for brightness, because if it is outdoors, the outdoor light will require the overall brightness to be improved, and if the anti-shake technology is not done well, the user will be more dizzy.
Winston Churchill once said, "As far into the past, as far into the future," the same is true of the development of new technologies. Therefore, in Fan Xiao's view, some fundamental problems or pain points can be solved through new technologies, so that everyone does not need to use mobile phones frequently or when there are alternatives, perhaps the tuyere period will go up.
The "oasis" created by XR is the foreseeable future, but the current software and hardware technology proves that "the future is not yet here", which depends not only on the investment in technology research and development, but also on the enthusiasm of creators, but in the short term, we can only imagine the future with the help of science fiction movies.
*: Business School Magazine, January 2024.