As technology continues to advance, an increasing number of smart wearable devices have emerged. In addition to the most well-known smart wristbands and smartwatches, VR devices are also a significant segment in the wearable device field, with many giants making strategic moves in the VR domain.
Looking back, VR is not a new concept; as early as 2016, the VR industry experienced a surge. However, influenced by various factors, the VR industry eventually fell silent. Nevertheless, in recent years, with the gradual maturation of technology and the expansion of industry players, the VR industry has once again been revitalized. Particularly, the launch of Apple's Vision Pro in 2023 has given the VR industry a significant boost.
PICO "In Peril"
It is widely acknowledged that PICO can be considered a leader in the VR field. Especially after being acquired by ByteDance, PICO began to expand rapidly, with its team size growing from around 200 to a peak of 2,000. According to IDC data, in the first half of 2023, China's AR/VR headset shipments reached 328,000 units (sales-in terms), with PICO's market share in China's VR market reaching 58.7%, far ahead of other manufacturers. One would expect PICO, as a leading player, to soar to new heights, but the reality is quite the opposite; PICO has not only failed to expand its reach but has also begun to retract, announcing layoffs and organizational restructuring.
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On one hand, the VR industry is facing a downturn, and PICO, being part of it, is inevitably affected. In fact, despite VR not being a novel concept and major VR manufacturers continuously fostering consumer awareness, consumer habits have not been cultivated. According to data from CINNO Research, global AR/VR shipments in 2023 were 8.57 million units, a 15.6% decrease from 2022. The entire VR industry is languishing, and PICO has also experienced underwhelming sales. As a result, PICO has adjusted its sales targets for the full year of 2023.
On the other hand, the concept of the metaverse remains distant, and the hype around VR devices, seen as the gateway to the metaverse, has cooled. In fact, a significant reason for the resurgence of VR devices is attributed to the popularity of the metaverse concept. In 2022, with the metaverse concept taking the world by storm, VR devices were regarded as the entry point to the metaverse, thus accelerating their development. Major companies rushed to establish their presence in this space. At that time, to secure the "ticket" to the metaverse, ByteDance spent 9 billion yuan to acquire the VR manufacturer PICO.
Now, two years have passed, and the metaverse is still far from the general public, with the metaverse trend gradually cooling down and related concepts fading. Against this backdrop, major companies actively exploring the metaverse have also made adjustments, beginning to scale back their metaverse business lines. As a key instrument for ByteDance's development in the metaverse, PICO has naturally been affected by the receding metaverse tide and has undergone organizational restructuring.
Sluggish Sales
In fact, it's not just PICO; the entire VR industry is feeling the chill, and even now, the VR industry has not been able to break free from the dilemma of declining sales. According to the latest "AR/VR Headset Market Quarterly Tracker Report" released by market research firm IDC, in the first quarter of 2024, China's AR/VR headset shipments were 107,000 units (sales-in terms), a 37.8% decrease compared to 2023. Among them, VR (virtual reality) shipments were 22,000 units, a 72.6% year-over-year decline. So, what exactly makes it difficult for VR devices to win consumer favor?Firstly, the high price of VR devices has led to a wait-and-see attitude among consumers. Although the VR industry has been developing for many years, consumers still have limited understanding of it, making VR a novelty for them. At the same time, influenced by various factors such as technological investment and market supply and demand, the prices of VR products are relatively high. Last year, Apple's Vision Pro was released with a price tag of $3499 (approximately 25,000 RMB). The high cost has deterred some consumers, naturally affecting the sales volume of VR products to a certain extent.
Secondly, the user experience of VR products still needs to be optimized to stimulate consumers' enthusiasm for purchase. With the continuous advancement of technology, the performance and functionality of VR devices are increasingly refined. However, it cannot be denied that current VR devices still have some "flaws," such as discomfort when worn, unnatural interaction, poor resolution and game graphics, and dizziness. The existence of these issues greatly affects the user experience, and many potential consumers who are willing to buy are "discouraged."
Thirdly, privacy and security concerns also affect consumers' willingness to purchase. In fact, VR devices collect a large amount of sensor data during operation, including environmental and biological data, all of which are closely related to users' personal information, the importance of which is self-evident. The consequences are unimaginable if data leaks occur. Consumers' concerns about privacy and security issues with VR devices also affect their attitude towards purchasing VR products.
In addition to hardware limitations, content is also a significant factor that restricts the development of the VR industry and affects the mainstream application of VR devices.
In fact, PICO, as a leading company in the industry, has not been small in its investment in content ecosystem construction. Specifically, PICO has not only set up a dedicated Pico Studio department to focus on introducing high-quality 6DoF games from overseas but has also increased its investment in producing and introducing a large number of video content, allowing users to enjoy Hollywood blockbusters and star VR concerts in VR cinemas. Moreover, ByteDance has also reallocated its best talents from other positions to the PICO department to make up for the shortcomings in film, game, and social VR content. However, even so, consumers still believe that PICO's content is insufficient. Behind PICO's "content barrier" lies a common challenge faced by the entire VR industry.
Firstly, there is a shortage of VR content developers, making it difficult to establish a content ecosystem. In fact, the number of VR developers in China is still relatively small, which also results in a relatively small number of VR contents in China, and a significant portion of the content relies on overseas introduction. For example, in the first half of 2022, China's top VR content platform, Pico Store, only launched 42 new titles, most of which were introduced from overseas, with only 7 Chinese works, accounting for only 16.67%. Due to the small number of content developers, the construction of the content ecosystem has also become slow.
Secondly, the high cost of VR content development puts pressure on VR companies. In order to expand the influence of VR devices among consumer groups and promote their rapid breakout, VR manufacturers have adopted strategies of selling at reduced prices, with PICO even launching a "180-day punch card return half price" purchase activity. However, the lower the selling price, the lower the profit, and VR manufacturers represented by PICO can be said to be "selling at a loss to attract attention." On the other hand, VR manufacturers also need to accelerate the improvement of the content ecosystem to enhance the product's appeal to consumers. However, due to high hardware costs and high content production costs, the cost of VR content development is also considerable. For VR device manufacturers who are still "operating at a loss," the development of VR content is also a significant pressure.
In conclusion, the VR industry seems to have encountered a fog, whether it is the decline in sales or the withdrawal of major manufacturers, all of which seem to confirm this point. However, from another perspective, technology is constantly changing and developing, and when technology reaches a certain level, the problems that restrict the development of the VR industry will be overcome one by one.Despite numerous challenges, VR manufacturers are forging ahead and continuously striving in various aspects such as technological innovation, new product development, and content improvement. It is believed that with continuous technological breakthroughs, the practicality of VR devices and the user experience will be further enhanced, and at that time, consumers will be attracted to VR devices once again. It can be anticipated that the fog shrouding the VR industry will eventually dissipate one day.