(Chinese Version)

Zhang Jindong, chairman of Suning Holdings

An E-commerce Conference is being held in Beijing as part of the China Beijing International Fair for Trade in Services (CIFTIS). Zhang Jindong, chairman of Suning Holdings, revealed at the China Beijing E-Commerce Conference that over 300 Suning Offline VR Experience Centers would be opened across China, which will become the largest VR offline experience platform in China.

This piece of news shocked almost everyone in the Chinese VR circle. 300 centers to be built within three months? Really? As we all know, there are so few high-quality offline VR experience centers in China. So is it possible that there is nothing but a couple of VR gadgets in Suning’s offline VR experience centers?

Coincidentally, I came across a Suning store last week and found an offline VR experience center in the first floor under construction. This was the first time I saw so few people around HTC Vive area, because people usually have to wait in queue for two hours to try out HTC Vive for merely two minutes. Some salesperson approached me and told me I could try out the HTC Vive for free if I downloaded Suning’s APP and signed up.

Although such promotion strategies sound outdated, I followed the instruction and successfully tried out HTC Vive. So is Suning serious about the offline VR experience center?

A real offline VR experience center?

At present, most offline VR experience centers only allow users to sit in an egg chair and wear an VR glass to watch a short 4D to 9D thriller at the expense of RMB 30 to 50. The majority of audience in these experience centers are kids, and for most people, these egg chairs are only an upgraded version of the skatekart-red in front of many supermarkets in China.

VR egg chair & skatekart-red

Suning’s offline VR experience center is, of course, different, but only slightly. After all, HTC Vive can already offer the best VR experience at this stage.

In addition, these offline centers will certainly be integrated to Suning stores, so that consumers can try out VR gadgets before purchasing them. Although we still don’t know if Suning will be part of Alibaba’s Buy+ plan even when Alibaba has already invested in Suning, Suning has already demonstrated its ambition in VR sector in the HTC Vive China Strategy & Ecosystem Conference held on April, 26th.

Will VR create a new opportunity for e-commerce platforms in the future, as Mr. Zhang predicted in his speech? I’m not quite sure. But I can say for certain that after six years of bumps and turns, Suning will seize any opportunity that might lead to success.

Offline VR experience centers VS flagship VR cyber bars

When it comes to offline VR experience center, we’ve got to mention flagship VR cyber bars, co-established by HTC and Hangzhou-based Shunwang Network Technology, one of China’s largest internet café software providers in China. On May, 6th, they officially began to recruit cyber cafes and announced a list of 50 cyber cafes across China to which they will give HTC VR equipment for free.

However, the market didn’t respond well, because the standards for membership were so high. Two of the most important requirements are:

• Those that are excellent at offline management and could afford to decorate are preferred. New types of cyber bars such as electronic sports bars and internet cafes are preferred.
• Those that can make room for an independent experience center covering no less than 3mX4m.

In other words, cyber bar owners need to both have strong and rich management and executive ability and afford the cost for an independent VR center themselves. While Shunwang Network only provides a set of HTC Vive equipment worthy of around RMB 7,000, cyber bar owners have to spend around RMB 20,000 for decoration. In addition, cyber bar owners will have to afford the venue cost themselves and follow the instruction of Shunwang Network. So it’s not a sensible option at all to apply for the flagship VR cyber bar.

Although flagship VR bars can benefit from Shunwang Network’s advantage as a widely-adopted platform, VR games are still not mature enough. As a matter of fact, most VR games are only Demo version, so few people would spare money and time trying out something immature, though people at cyber bars are mostly heavy game players.

I do admit that HTC Vive is the leader in the VR industry, yet I doubt if HTC Vive’s marketing specialists know clearly who are the target users, because game players at cyber bars are certainly not the target users.

On the one hand, the target users of HTC Vive should be potential heavy VR gadget users, while most game players at cyber bars are regular customers who live in residential communities near the bar and who won’t care if there’s any newly-installed VR equipment in these bars.

On the other hand, for cyber bars that depend pretty much on fluent customers at around shopping malls, these customers also won’t care if they can enjoy some additional service by paying RMB 0.5 or 1 more an hour. What they really care is if the basic service is good enough.

The real target users of HTC Vive should be people who have strong interest in VR equipment and would love to go to professional offline VR experience centers to have a try. At present, most offline VR experience centers only allow consumers to have a primary experience of VR products, such as watching a short video and playing a small mobile game. The goal is merely to stir up their interests in VR products. From this perspective, Suning’s offline VR experience centers will certainly do a better job to achieve this goal.

The future of the Chinese VR industry

Competition in the global VR industry is still not fierce enough, but already quite intense in China in terms of offline VR experience centers. The other days, the first Mobile VR Experience Centers, co-established by Baofeng Mojing and GOME, debuted at Madian Store of GOME, Beijing. Leading Chinese VR hardware developer ANT VR and offline entertainment provider Choice VR have also entered into a strategic partnership plan. Another major VR developer VRLe has already opened over 1,000 offline experience centers across China. Zeng Maojun, president of Wanda Film, has also revealed that over 100 offline VR experience centers would be established in Wanda Theatres across China within the next two or three years.

The Chinese VR industry is haunted by homogenization, because most VR developers have similar technologies and adopted similar business models, whether it is “content plus channel” or “hardware plus content”. As a matter of fact, the Chinese VR market is dominated by a few VR developers, so that entrepreneurs may find it really hard to make any breakthrough, especially in terms of mobile gadget. An insider even revealed that 70% of mobile gadgets are manufactured in the same contract factory, though tagged differently.

In addition, a winter is to befall the Chinese VR industry, so many entrepreneurs might be forced to shift their focus to VR content or channel. Statistics suggest that over $700 million was raised in the entire Chinese VR industry in 2015, yet the attention towards VR hardware in the secondary market reduced significantly in 2016.

During this year’s GAD Global Game Developer Summit VR Forum, Hu Zhuoheng, senior investment manager at Hejun Consulting, suggested that the golden time to invest in VR hardware projects has passed, while VR content should be the new focus at present.

This is actually a good thing for the entire industry. While offline VR experience centers can help stir up consumers’ interests into VR products, high-quality VR contents will really bring VR close to the general public.

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

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.