VR meets the Metaverse, the leeks are not enough to cut

After five years of freezing, “Metaverse” is not a life-saving straw for VR.

How to make the stock price rise rapidly in a short time? Get a touch with “Metaverse”.

Despite repeated concerns about supervision-according to 36 krypton statistics, since the fermentation of the Metaverse concept, at least 10 companies including Tianxia Show, Zhongqingbao, Shengtian Network, etc. have received supervision letters or letters of concern, but this tumult The “Digital Great Leap Forward” does not seem to have stopped, and the “Metaverse concept stocks” have made several comebacks.

VR meets the Metaverse, the leeks are not enough to cut

From mid-August to the present, the popularity of the Metaverse concept has continued unabated. Source: Wind

The arrival of the grand feast is still unknown, but capital has recklessly opened the mode of early overdraft. To this day, “Metaverse” can only be regarded as a mess of old and new technologies. The only factor with a little certainty is VR, an arbitrary door that opens a virtual utopia.

After the five-year freeze period, VR was “rescued” again, and the market held the life-saving straw of “Metaverse” tightly in its hands. But history seems to be repeating itself. Every time VR reaches its climax, it is swept to the forefront by a certain concept. As a result, few people understand what the entire VR industry is doing. People just put their expectations of advanced technology concepts on VR again and again.

“Metaverse” roared in, but some issues were deliberately ignored-the market and the industry have a significant temperature difference, and the upstream and downstream of the industry chain are clearly fragmented. Is the VR industry really ready?

01 Schrodinger’s VR boom

In the past eight years, Li Peng has come and gone from the VR industry. He watched an industry stumble forward in the wind and frustration, even a little distorted.

“Only things that are imaginary and far enough can be blown. VR is not easy to blow.” In this way , he separates the two concepts of “Metaverse” and “VR”, and doesn’t feel how closely the two are connected.

In 2014, Li Peng worked for a leading magazine group. At that time, the bad news of “paper media is dead” was rampant, and the magazine group’s revenue continued to decline. As the VR market was gaining ground in China, the VR project led by Li Peng and his colleagues unexpectedly became a means to stop the company’s revenue decline.

The source of the industry’s grand occasion at that time can be traced back to the technology giants on the other side of the ocean. Starting with Google’s launch of Google Glass in 2012, in the next few years, Facebook (Meta) acquired Oculus and launched VR headsets; Sony, Samsung, HTC and other major manufacturers launched related hardware products; Microsoft launched AR terminals Holoens and other events one by one Happened, and the VR industry became no longer peaceful.

According to the technology maturity curve, the five years from 2012 to 2016 were defined by Essence Securities as the “expansion period” of the VR/AR industry. Enterprises and institutions entered the market in a hurry, intending to seize new growth points.

“At that time, the domestic VR technology was mainly based on panoramic video and panoramic pictures. As a new form of media, in the environment of admiring VR, the company successfully attracted a large number of advertisers, and the cost was mainly concentrated in labor costs. Controllable, it brings revenue.” Li Peng told 36 krypton.

In the last wave of VR craze, the most popular product form of domestic VR hardware is the mobile terminal head display, which is the so-called glasses box, which needs to be used with a mobile phone. VR can be realized through a simple concave-convex mirror + mobile phone screen to display panoramic video or pictures. principle.

The “simplicity” of the product is not unrelated to the technical conditions at that time. To realize an all-in-one machine that can provide a perfect VR experience means that all core components including chips, displays, optical devices, acoustics, and sensors meet the standards. On the one hand, this will inevitably point to high costs. With weak chip performance, mass production of products is almost impossible.

The inability to mass produce will in turn affect the upstream industry chain and it will be difficult to reduce costs, which will lead to high prices that are not affordable for mass consumers, and eventually return to the vicious circle of inability to mass produce.

But even so, in those five years, the VR market composed of more than 3,000 entrepreneurs was still running spontaneously, scattered and disorderly, and chaos was breeding in it. For example, the well-known demon stock “Storm Group” at that time used the concept of hype to “rise tall buildings” in the secondary market.

In September 2014, Storm Group launched VR glasses and established the “Storm Mirror”, claiming to be the “world’s largest VR company”, and was also called the leader of the VR industry by some media. After going public in March of the following year, Baofeng had a daily limit for 29 consecutive trading days. In less than three months, the stock price soared from 7 yuan to 327 yuan, a cumulative increase of 46 times, and the market value was once close to 40 billion yuan.

“Building collapse” also came quickly. Insufficient technology, poor C-end experience, high costs and other issues have made Baofeng’s financial hole larger and larger. Since 2017, Baofeng’s stock price has been declining. After just 5 years of listing, the stock was delisted in a panic, with the stock price remaining at only 0.28 yuan and the market value being less than 100 million yuan.

The last round of VR craze continued the logic of China’s technology circle “following Silicon Valley”. In media reports at that time, 2016 was called the “first year of VR”, and that was the last time VR received widespread attention.

Public data shows that in 2016 alone, about 3,000 VR startups were born, and investment and financing cases have also reached their peak. Analysys data shows that there were 241 equity investment and financing events in the VR/AR track industry that year, which is the sum of the number of events in 2017 and 2018.

Storm Group’s tearful departure was only the first dominoes toppled. Beginning in 2018, the industry’s winter is coming, and many VR startups are dying. Even technology giants such as Nokia have chosen to cut off the VR business line or are on the verge of exiting.

Outdated technology and unformed ecology cut off the possibility of most startups. An Essence Securities report shows that global VR headset shipments in 2018 were 3.5 million units, a year-on-year decrease of 7%, while shipments in 2017 increased by as much as 108% year-on-year, and shipments in 2019 only increased from the previous year. With 400,000 units, the VR headset market is almost stagnant.

“Any technological development, as long as the water is stirring, there must be a bubble.” During the development of the VR industry, practitioners have clearly realized that between the market and the industry, there are always hot cycles of “internal and external fragmentation”.

As one of the earliest entrepreneurs to enter VR in China, Guo Cheng did not perceive the so-called “hotness”. “Basically, this industry has been at a low point for nearly ten years, and this year has only seen a slight improvement.” Many VR entrepreneurs and Guo Cheng feels the same, no matter how lively or deserted outside, “what should I do” in the industry.

However, since the beginning of this year, they have to accept the gaze of the market again-a hat called “Metaverse” is put on their heads, saying that they are the entrance of “Metaverse”, institutions, investors, and universities. The factories swarmed up again, putting out a large amount of data and reports to prove that “VR should be hot again.”

This gold nugget movement initiated from the downstream of the industrial chain has a full sense of “atmosphere”. Investors, Internet giants, and securities firms have worked together to push everyone’s expectations of “Metaverse”, and doing more “Metaverse” has become a collective conscious conspiracy.

02  to seize the “selling shovel”

The ecstasy brought by “Metaverse” has promoted the “overhead flow” in the investment world of VR to become popular again, but there are not so many VR projects worth investing in.

After falling heavily from height in 2016, everyone became sober and cautious.

Analysys data shows that since 2017, the number of investment and financing in the VR industry has been declining. There were 37 cases last year, and a total of 20 cases as of June this year, which is only a fraction of the data in 2016.

When the scope of investment in the primary market narrowed, many secondary market companies that took the initiative to connect with new concepts began to “harvest” on the market.

On November 18th, an open letter from Metaverse’s social products caused the stock price of Tianxia Show to soar by 5 billion yuan in 4 minutes. The next day, the Shanghai Stock Exchange issued a regulatory warning to Tianxia Show and related persons in charge, stating that when “Metaverse” and other related products and technologies are in a hot period of high concern in the current market, the company released relevant content about “Rainbow Universe” through non-statutory disclosure channels. , But the company has not actually participated in the research and development of AR, VR, MR and related hardware technology, and has no related hardware technology reserves or patents, and the company’s main business has not undergone major changes.

Companies similar to the world show are everywhere. After the People’s Daily called “Metaverse” recently, on November 18, 60 of the 69 stocks in the universe concept board fell, of which 29 stocks fell more than 5%.

Concept stocks have emerged one after another, but so far only those “shovel sellers” have really benefited from the “Metaverse” dividend and have performance support.

From a technical point of view, the contenders of the foundry king competition are still firmly grasping the overall progress of the track in the upstream.

West China Securities pointed out that optics and display are the core components of VR/AR upstream, which determine the future trend of the industry. When the downstream ecology is not fully established, the upstream industry chain technology determines equipment quality, mass production schedule, cost, etc.

Fengqi Apple, Luxshare Precision has recently received particular attention. On December 8, Tianfeng International analyst Ming-Chi Kuo released a research report saying that Apple has just begun planning for the second generation of AR/MR headsets and is expected to ship in the second half of 2024, and their initial exclusive NPI (new product introduction) The supplier is Luxshare Precision, the leader of the “fruit chain”.

This news drove the stock price of Luxshare Precision to surge 6.19% that day, although as of Luxshare’s 2021 mid-year report, VR/VR products have not yet contributed to revenue.

Among the upstream manufacturers, another major player, “Fruit Chain” star enterprise Goertek, also entered early.

Goertek’s layout of VR/AR nodes is synchronized with the previous round of VR outlets. Since 2012, GoerTek has acquired mainstream customers such as Sony, Samsung, Apple, Oculus, etc., helping GoerTek successfully cut into the product design, research and development, production and assembly of VR headsets.

Judging from GoerTek’s financial report data, the smart hardware sector, including VR/AR headsets, is gradually becoming GoerTek’s “cash cow”. In the first half of this year, the revenue and profit contribution percentages of smart hardware were 37% and 36.2%, respectively, compared with 23.16% and 18% in the first half of last year.

VR meets the Metaverse, the leeks are not enough to cut

The revenue composition of GoerTek in the past five years: Wind

Reflected in the secondary market, between 2010 and 2020, Goertek’s stock price rose from 2.4 yuan to 37 yuan, a cumulative increase of 1439% over the past 10 years.

Facing the sudden hot market, the voice from the upstream furthest from the market was calm and restrained. A Goertek R&D staff told 36Kr, “The current VR market is for hardware shops, and there is no special environment.”

Whether the hardware market is good or not depends on the shipments of important indicators.

Among various research reports, last year, “Global VR shipments were 6.7 million units, an increase of 72% year-on-year” is the most cited data, and many organizations predict that global shipments will reach 8 million units in 2021. But if the scope is reduced to domestic, the data is not so brilliant.

According to a report by West China Securities, in 2020 when VR is recovering, domestic VR shipments will be 1.9 million units, and this year’s forecast shipments will be 2.1 million units, an increase of only 10.5%.

The paradox is that the forecast of shipments is also an uncertain factor. IDC’s 2020 shipments are 7.06 million, but in 2018, IDC had predicted that shipments in 2020 will exceed 30 million, and in 2016, the forecast data was even 64.8 million.

VR meets the Metaverse, the leeks are not enough to cut

IDC 2018 forecast data

As one of the prerequisites for mass production, shipments and market enthusiasm are extremely unequal, which makes Yuan Ye feel a complicated mood of being “set up”.

He is the co-founder of the VR company EM3. Under the “Metaverse” boom, how to stabilize the pace of company planning has become a challenge.

Yuan Ye told 36 krypton that after capital and consumer expectations are advanced, the external rhythm becomes very fast. On the one hand, the company hopes to speed up the research and development progress to catch up with the boom, and on the other hand, it needs to ensure that the product technology is sufficiently mature. This requires constant mentality. To balance.

“Everyone knows that mass production of smart hardware is difficult. We have observed many peers. It is okay at the concept stage, but it will take a very long time to achieve mass production. So the company made it clear at the beginning of its establishment. Ability must be established.” Yuan Ye told 36 krypton.

EM3 was just established in May last year. The three hardware products that have been completed so far have not yet been officially sold. In order to solve the mass production problem, the company received the first batch of orders overseas by crowdfunding at the beginning of this year. The cautious advancement of EM3 is not alone.

03 It’s too early to talk about “outbreak”

Although the foundry process is mature, overseas representative products are listed on the market, and major manufacturers acquire VR companies and other iconic events frequently occur, the entire industry is still a long way from “outbreak”.

It is still difficult to “predict” how big the cake of VR can be. But at present, there are not many people who can participate in the cake sharing.

The research report of Essence Securities clearly pointed out that the proportion of domestic B-end shipments is significantly higher than that of the C-end. It is expected that the B-end hardware headset will account for more than 70% this year, and the C-end shipment share will further shrink.

But Guo Cheng has stopped all the company’s B-side business. He found that the repurchase rate of B-side customers is not high, and the reason behind it is closely related to the overall industry ecology.

“He (the customer) doesn’t know how to make money with this thing (VR), or the problem of incomplete ecological chain. In this period, the VR industry can make little money because the C-end has not risen.” Guo Cheng told 36Kr.

Considering that the C-end application of VR is still limited to games, the penetration rate can be preliminarily estimated from the proportion of VR players on Steam, the world’s largest game publishing platform.

The Steam platform hardware and software survey in November this year showed that VR players accounted for 1.84%, and this data exceeded 1.9% in 4 months last year, with a maximum of 1.96%. On the whole, the penetration rate this year is not as obvious as last year. promote. The market generally believes that a product or application penetration rate of about 10% to 20% will enter a period of rapid growth, and the penetration rate of less than 2% is still very low.

VR meets the Metaverse, the leeks are not enough to cut

November hardware and software survey on Steam platform Source: Steam

Although in the public opinion, VR hardware that seems more “scientific and technological” has occupied most of the attention, the aforementioned Goertek R&D staff told 36Kr that if the “Metaverse” is established, its highlight lies in software and software. The environment is the key.

The high development cost and the small number of users make it difficult to pay for high-quality VR content, and the longer payback cycle also weakens the development enthusiasm of VR content developers. Li Peng said that the issue of content scarcity still exists five years later.

In July of this year, the total number of applications on the Steam platform was 99,105, of which 5941 were VR-enabled content, accounting for less than 6%. Even the top manufacturers are not so comfortable in content-Oculus has invested a lot of money to buy multiple content teams, but Oculus Quest 2 currently has only one game “Beat Saber”, and All in yuan Universe’s Meta (formerly Facebook) is also relying on the old game ten years ago to support VR content.

Under various shackles, games have not yet become a key weapon in the VR education market. Professor Xu Jie, deputy director and professor of the Art Department of the School of Software and Microelectronics of Peking University, told 36Kr that due to its own interactive technology and the limitations of interfaces with other fields, the most valuable VR applications are still related to visual presentations, such as design, display, and simulation. show.

VR hardware is mainly divided into host-side VR, PC-side VR, and all-in-ones. All-in-ones are the direction of the industry and are considered to be the key to the popularization of VR. But Guo Cheng doesn’t think so. In terms of commercialization, he is not optimistic about VR directly entering the home scene. “Everyone is affected by Facebook (Meta). At this stage, the VR all-in-one machine directly entering the home will have a low reuse rate. , As strong as Apple and Microsoft, they also don’t have this ability.”

As for the usual user experience, although in the propaganda caliber of major manufacturers, the screen performance and chip computing power of various all-in-one machines on the market have improved compared with previous years, but real user feedback is still not a minority.

In a Taobao review of a head manufacturer’s VR all-in-one machine, consumers reported “dizziness, game inability to play”, “fuzzy look”, and “serious dispersion”. After many users use the product for the first time, the product becomes a mess.

Guo Cheng has explored the VR track for nearly ten years, and finally chose the offline VR experience store as the landing scene. This is the result of his countless balances between business and technology. “Start-up companies don’t have time.” He found that offline experience stores are the most profitable business model among a series of businesses he tried . The goal is to spread out the terminal.” Guo Cheng told 36 krypton.

Guo Cheng is anxious about commercialization, which is also the common mood of the front end of the industry.

VR is nothing new, but in the past ten years, this technology has not been truly marketed, and the “Metaverse” that turned out is like a collection of all technologies that have no market results in the past ten years-the market needs one “New name” to drive the market, practitioners also need a “new name” to complete user education.

What can be confirmed is that there is nothing new in the “Metaverse” basket, and all existing technologies, including VR, must continue to be polished and innovated, and there is no shortcut. “Metaverse” is related.

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