Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

Chasing the dream VR circle.

Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

‍From the “full real Internet” proposed by Tencent to the “Metaverse” that giants have deployed today, the VR industry has been regarded by the industry as the first “ship ticket” to land on the next generation of Internet positions.

On January 10, 2022, according to 36Kr report, Tencent plans to acquire Black Shark Technology, a gaming mobile phone company. Once the transaction is completed, the gaming phone-based hardware manufacturer will also usher in a business transformation, and its future business focus will shift from gaming phones as a whole to VR devices. In short, Tencent provides content , and Black Shark provides VR hardware entry .

In this regard, asked Black Shark Technology (Nanjing) for verification. As of press time, the other party has not responded.

At the same time, a source said: “Black Shark is valued at 3 billion yuan, and Tencent has cut it to about 2.6-2.7 billion yuan.” However, Tencent said that it would not comment.

In fact, in order to get the tickets of the Metaverse as soon as possible, Dachang has already started a head-to-head confrontation through investment, mergers and acquisitions. On August 29, 2021, Pico, a VR (virtual reality) startup, issued a letter to all staff, announcing that the company would merge into ByteDance’s VR business. It is reported that the acquisition price reached 9 billion yuan, and this transaction is also the largest acquisition in the VR field in 2021. NetEase CEO Ding Lei also has his own opinion on the Metaverse, thinking that NetEase is ready, while Baidu has launched the Metaverse App Xi Rong.

Industry insiders believe that Metaverse is inseparable from hardware terminal entrances and virtual content scenarios. For large manufacturers, the way of investment and acquisition can certainly make up for their deficiencies in the hardware link, but there is still a certain distance from the in-depth layout of the Metaverse and the completion of mature commercialization.

There is no doubt that after 20 years of running wild, the dividend period of the Internet has passed. Today, mobile Internet traffic has peaked, and the stock track is crowded. In the environment of the regulatory level cracking down on the disorderly expansion of capital and regulating the development of the platform economy, in the face of the inevitable “inflection point” of the “Metaverse”, it is clear that none of them want to miss the next technological trend.

01 Why is a gaming phone company

Compared with the hot sales of Baofeng Magic Mirror VR glasses in 2014, the domestic VR market was relatively quiet before. It wasn’t until last year that the situation began to change dramatically.

As a leading VR hardware manufacturer in China, Pico, which was acquired by Byte, was also a product of the VR outlet that year. But for Byte, the lack of content ecology is still the biggest shortcoming at present. Therefore, it soon acquired the VR game developer Mengtu, but just like the development of its heavy game business, VR content still needs time to accumulate.

More than one senior investor told the author that the VR track must be the game of big manufacturers. Similar cases include Facebook’s acquisition of Oculus and Snap’s acquisition of WaveOptics, all based on the logic of “content + hardware”.

Today, it is not difficult to see the anxiety of domestic and foreign manufacturers to tell the new story of “the second half of the Internet”. From a time point of view, the next 1-2 years will usher in a concentrated outbreak of VR tracks.

Zuckerberg, the founder of Meta and focusing on the VR track, mentioned in an interview that 10 million VR users will be a key node, after which “the entire ecosystem will explode.”

Before that, Tencent, which has rich content ecology and technical strength, urgently needs to create its own VR hardware entrance to seize the first-mover advantage.

Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

After sorting out by the author, there are generally two reasons for Tencent’s acquisition of Black Shark Technology on the market at present: First, the Black Shark Technology team is from Huawei and has the advantage of hardware supply chain; Second, before Tencent chose to acquire Black Shark Technology, two In fact, the two parties have already cooperated, and the two sides have a foundation of trust.

According to Tianyancha information, Black Shark Technology was established in 2017. Currently, “Tianjin Venture Capital Industry Co., Ltd.”, which is wholly-owned by Xiaomi, is the major shareholder holding 46.4% of Black Shark Technology.The 36 Krypton report also mentioned that the acquisition has been recognized by Xiaomi’s executives.

In fact, since its establishment, Black Shark Technology has launched several gaming phones and has become the official designated phone for many games and mobile e-sports events. Relevant data shows that the market share of Black Shark mobile phones once exceeded 70%.

Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

Since 2020, the Black Shark mobile phone has begun to cooperate with Tencent to add exclusive game functions to it. For example, Black Shark II and Black Shark III provide customized optimization for popular mobile games such as Tencent’s “Peace Elite” and “QQ Speed ​​Mobile Game Edition”. It was also during this period that the blessing of Tencent’s game content ecology gradually became one of the biggest selling points of the series.

Perhaps it is precisely because of Black Shark’s technical strength in hardware research and development, as well as the previous cooperation experience between the two, that Tencent finally decided to acquire Black Shark Technology as a new starting point for itself to enter the VR track and even the Metaverse.

02 A business that continues to burn money

Based on the logic of “content + hardware” , the combination of Tencent and Black Shark seems logical. However, on the VR track, ByteDance clearly showed a stronger determination to bet.

We can compare the acquisition of Pico with another famous hardware acquisition in the history of ByteDance, “Hammer”. Compared with Pico’s 9 billion yuan, Byte acquired the Hammer’s 100-person team for only 300 million yuan. And a number of technical patents.

From the perspective of investment targets, Pico is scarce in the industry; from the node of industry development, the outbreak of Facebook Oculus has verified the feasibility of VR commercialization. These two points are tantamount to stimulating bytes.

In 2014, Facebook paid $2 billion to acquire Oculus, which was booming at the time. The Oculus Rift, launched in 2016, became the world’s first consumer-oriented VR headset. In the more than six years since then, Facebook has completed at least 24 related investments, and the number of people in charge of this business has rapidly expanded from 1,000 in 2017 to 10,000.

At the end of October 2020, Facebook released the Oculus Quest 2, which sold nearly 3 million units three months after its launch for only $299. Industry media predicts that the annual sales of Oculus Quest 2 in 2021 is expected to reach 7 million to 8 million units.

It seems that ByteDance and Facebook have too many similar labels: social, content, globalization . When Zuckerberg is reshaping a “Metaverse” with a new software and hardware ecology, ByteDance and Tencent should There is a similar proposition: if Tiktok and WeChat (WeChat) are applied to the next-generation terminal devices that subvert mobile phones, what kind of ecology should the original 2C and 2B content show?

There is not much time left for Byte Tencent, and “spending money to buy time” is obviously a good choice. It’s not just Facebook and Byte Tencent that acquired hardware manufacturers. At the end of May last year, social giant Snapchat announced the acquisition of AR optical module manufacturer WaveOptics for $500 million; in March 2020, domestic mixed reality company Nreal announced the completion of a $40 million investment, Kuaishou lead.

“Even big Internet companies should be prepared to burn money or even fail. Although VR is sexy, if there is no suitable content and scenes, domestic consumers may not pay the bill,” a VR industry insider told the author. Oculus has not been sold in China so far, and its miracle of growth overseas, whether it can be bought in the domestic market is actually unknown .

Hardware terminals are also a business that requires continuous investment. Facebook acquired Oculus for $3 billion eight years ago to become the leader in VR today. A few years ago, Zuckerberg said that he would invest $1 billion in VR in the next 10 years.

Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

On the other hand, Tencent’s interior offers a whole new perspective on the story .

In early 2020, at a game investment strategy meeting, Tencent Chief Strategy Officer James Mitchell pointed out that Tencent’s excellent return on game investment has exposed some problems: “The game industry should not have such a high rate of return. Return on investment, it just shows that we don’t have enough investment failures. Why don’t we have so many failures? It’s because we don’t see enough and invest too conservatively.”

There are hundreds of billions of free cash flow lying on Tencent’s books, not only need to “hold high”, but also “would rather be wrong than miss.” As a potential entrance to the next era, Tencent naturally cannot lose the opportunity to snatch the ticket of the Metaverse.

03 Investors need Metaverse

As a global giant that relies on social and content products, this is not the first time Tencent has responded to the Metaverse.

Tencent CEO Ma Huateng was actually the first at the top of a Chinese internet company to publicly talk about similar concepts. In November 2020, Ma Huateng once wrote an article to propose the concept of “all-real Internet”, and said: “The door to the virtual world and the real world has been opened, whether it is from the virtual to the real, or from the real to the virtual, all are committed to helping users achieve A more authentic experience. Another big reshuffle is about to begin, just like the transformation of the mobile Internet, those who can’t get on the boat will gradually fall behind.” He also emphasized that the full Internet is Tencent’s next “must win” battle.

This sentence is talking about the dividends of the times in the period of technological transformation. It sounds like it is contrary to the popular principle of “common prosperity”, and it also makes the future of the “full Internet” appear slightly suspicious.

Over the past year, the public discussion of the concept of “full Internet” has gradually been classified under the “Metaverse”, but other than enthusiasm and rich imagination, we have not seen any substantial progress, or Said that the current limited progress is not worthy of such high enthusiasm and imagination.

Byte 9 billion, Tencent 3 billion, giants compete for Metaverse tickets

“Immersive experience is an important feature of the next-generation Internet, which is an industry consensus, but in terms of how to immerse, most people in the industry believe that VR will become the main breakthrough.” A VR industry insider told the author that compared with At present, AR (augmented reality) is slightly thin, and VR has more room for imagination.

However, at present, content is still the key to restricting the development of the VR industry. It is worth noting that although it has become the leader of domestic enterprises, the number of application ecological products under Pico is still not rich. “At present, the overall VR market is still too small, and the total volume of shipments of several major manufacturers is so large.” The aforementioned industry source revealed that although his company’s products have VR functions, they are currently in a “to be activated” state. “We still hope to wait until the market size is bigger, and we can restart the VR terminal at any time.”

According to the IDC report, Pico ranks first in China’s VR market share in 2020, and will complete the B+ round of financing of RMB 242 million in March 2021. In May last year, the company released a new generation of VR all-in-one machine, Pico Neo 3, and sales exceeded 10 million in 24 hours. However, for a VR device priced at 2,499 yuan, sales of 10 million units actually only mean sales of 4,000 units, which can be seen in the domestic niche of VR devices.

Given how big the concept of the Metaverse is and how technically demanding it is, it may be premature to talk about the outcome. But the investment circle has been “suffering for a long time”, and the meaning of imagining the Metaverse is almost like looking for plum to quench thirst. “The investment community needs new stimulus. Last year, new stocks in the Hong Kong stock market broke frequently, the broader market was sluggish, and the gaming sector was hit hard. VR seems to be the only direction that looks like it now.” An investor and the author analyzed.

This anxiety is projected on Tencent, that is, compared to the stagnant business data and the unpredictable and unpredictable hands of supervision, it is safer and more interesting to imagine the grand concept.

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