Meta Platforms announced a preliminary agreement with Tencent Holdings to launch the cheapest version of its virtual reality headset in China. This marks Meta’s return to the Chinese market after 14 years since the closure of Facebook in the country. The deal will make Tencent, the world‘s largest video game company, the exclusive seller of Meta headsets in China, with sales starting in late 2024.
Meta returns to China after 14 years, agreement with Tencent for viewers
According to the Wall Street Journal, a less expensive version of the Quest 3 model will arrive in China, with less expensive optics. But it would have the same computational capabilities and a lower price, with the aim of conquering the Chinese market. However, it is currently unclear whether Tencent will need to get formal approval from the Chinese government.
The deal involves a revenue split, with Meta taking a larger share from device sales and Tencent earning more from revenue generated by content and services. Indeed, Meta headsets will provide games and other apps published by Tencent.
The agreement represents a significant opportunity for Meta to re-enter the Chinese consumer market, after Facebook was blocked in 2009. A large and sensitive market to the VR world. At a time when several US technology companies are abandoning the Chinese market due to rising costs, new data regulations and intense domestic competition, Meta is bucking the trend.
However, global demand for VR headsets is declining, and the virtual reality market could continue to be niche. The Meta-Tencent deal marks a significant step for Meta into the Chinese market, but success will depend on the two companies’ ability to navigate regulatory and market challenges.
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Source
Wall Street Journal