VR Industry, A Rising Star In China

摘要: Although so far there hasn’t been any game-changing VR product that is able to turn the tide and make VR mainstream, VR technologies are recognized by society as an indispensable part of the medium of work, life, entertainment and leisure in the future. And on this year’s CES (International Consumer Electronics Show), VR products have been huge stars.

(Chinese Version)

Although so far there hasn’t been any game-changing VR product that is able to turn the tide and make VR mainstream, VR technologies are recognized by society as an indispensable part of the medium of work, life, entertainment and leisure in the future. And on this year’s CES (International Consumer Electronics Show), VR products have been huge stars, showing the world the immense potential and power that this particular industry has. Given the growing global VR industry, the VR sector in China is also developing at a rapid speed.

If we were to evaluate an industry’s development in the aspect of its financing situation, then it’s fair to say the VR sector has gained enough attention from the business world. Particularly during the period from December 2015 to January 2016, several enormous investments were injected into the VR industry. Additionally, services related to virtual reality are also gaining momentum. So what exactly will this sudden investment wave toward the VR sector in China bring?

One month, seven investments, ten million dollars: A stimulus to the VR industry in China

Within just one short month, seven investments have been poured into the VR sector in China, with every one of the investments with an amount of over ten million dollars.

Zanadu, the startup that rolled out the Journey VR app and released the VR traveling video clip The Dream, received its an investment of 80 million RMB in its series A+ round of financing on December 22nd 2015.

On December 24th 2015, Ling VR was injected with an investment of USD ten million in its series A round of financing from LeTV.

DeePoon, known for its DeePoon E2 and DeePoon V2, officially announced to have completed its series B round of financing at USD 30 million, an investment led by Xiaomi and Xunlei, and jointly invested by Kingnet. It’s said that after this round of financing, DeePoon’s market valuation would hit around 800 million RMB.

On December 29th 2015, ANTVR announced to have received 300 million RMB in its series B round of financing and claimed that the company’s valuation has reached 830 million RMB.

On January 21st this year, mobile VR content publisher IMNET received an investment of 190 million RMB from MCLOUDVR. On the same day, mobile VR advertisement maker ADot also received an investment of 110 million RMB from MCLOUDVR.

It also happened to be the same day that Baofeng Mojing announced the result of its second round of financing: a total investment of 230 million RMB, led by CITIC CAPITAL with Tianshenhudong and Baofengxinyuan alongside. After this round of financing, Baofeng Mojing’s market valuation hit 1.43 billion RMB.

Several investments that are over ten million dollars happened together within one month, which makes people start to wonder and think highly about the VR industry in China. If we also take the small-amount investments in the industry, the VR industry looks even more prosperous. On January 13th this year, Geeya released a notice saying the company would invest 4.5 million RMB in Jingmenghudong, a Chengdu-based VR company that’s dedicated to human-machine interaction in the field of VR technologies. Later on January 15th, Chinese VR content provider BELLCAT also announced to have received an angle investment of over ten million RMB that’s led by FHCapital and contributed by Sina Micro VC and Baofeng Mojing.

It’s fair to say that in China, VR projects nowadays are appealing to investors. And with abundant financial support, the VR industry in the country will surely be on the right track. Although the VR industry in China still lags behind its international rivals in terms of technologies, they have done an excellent job in catering to local markets and making their products more down-to-earth and more appealing to consumers. Given the current development, Chinese VR companies can actually grow strong enough to compete with their international rivals in the near future.

Preparation before the booming age of the VR industry

Recently, Deloitte & Touche released its 2016 TMT industry Forecast, which states that the VR industry will be a major tendency in 2016. In other words, this year will be a turning point for the VR industry. According to the report 2015 Chinese VR Industry Report, the scale of this particular industry in 2015 was 1.56 billion RMB, and it’s expected to soar to 5.66 billion in 2016. Furthermore, the report predicts that the scale in 2020 would reach more than 55 billion RMB. Many other organizations also estimate that the market scale of the VR industry might hit over one trillion RMB in ten to fifteen years and that the hardware, entertainment content and services sector would have more investment opportunities.

Despite the bright future, the VR industry is still in its early developmental phase. During this process, the VR industry is vulnerable to risks and therefore needs constants support in technical, financial and resource aspects. The current heated investment scene of the VR industry in China in some way shows that this particular industry is indeed thriving and that the investors and entrepreneurs all have their own agenda.

For entrepreneurs, they need the investment to improve their R&D in order to have an edge in the fierce competition and have more say in the market. For instance, Baofeng Mojing gave out 19% of its shares to get an investment of ten million dollars in its series A round of financing.

As for investors, they are more after the potential of the VR industry. During the early development phase of the VR industry, investors have been finding ways to make effective investments in order to have better returns in the future. However, it should be noted that currently there are too many startups in the VR industry, which makes it a challenge for investor to filter out startups that are worth the money.

Make no mistake, the VR industry is growing, but still weak

Although the heated investment scene and the potential this particular industry have boosted entrepreneurs and investors’ confidence in the VR industry, it doesn't necessarily mean that the VR industry has grown strong enough. So far, it’s still a rather new and weak industry. For example, Baofeng Mojing, a brand that has received a relatively high amount of financing in the industry, only had 40 million dollars for its second round of financing with a market valuation of 200 million dollars. Compared to Didi, Meituan and Eleme etc., it’s like nothing.

In this case, we can only say that the VR industry has a bright future ahead but hasn't become a blue ocean yet. That being said, there’s no VR startup so far has the confidence nor the ability to become the industry leaders in the near future. Therefore, investors won’t really put all their resources in this industry. Thus, whether it’s investors, industry insiders or the general public, people must keep a clear mind about the VR products as well as the industry itself.

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[The article is published and edited with authorization from the author @Constantine, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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