Meta Reportedly in Talks With Tencent to Bring Quest to China

Facebook and Twitter have been blocked in China since 2009, but Meta CEO Mark Zuckerberg is hoping to get back in that country with Quest, according to a Wall Street Journal report.

Citing people familiar with the matter, the report maintains that Meta has held discussions with several Chinese tech companies, making the most progress with massive entertainment conglomerate Tencent.

The Meta-Tencent talks reportedly came to a head late last year, with Tencent Chairman Pony Ma deciding to proceed with the negotiation first and “see what deals they could reach,” WSJ reports.

Undoubtedly the most complicated bit of the talks would revolve around VR content distribution, and how it’s moderated for Chinese markets. It’s said a portion of Meta’s global offerings could be on offer alongside Tencent’s own apps and services.

In 2009, Facebook and Twitter were banned in China after breaching Beijing’s notoriously strict censorship laws; the ban is thought to have been a direct effort to quel the July 2009 Ürümqi riots that took place in the country’s Xinjiang Uyghur Autonomous Region.

More recently, Chinese executives were allegedly worried that Zuckerberg isn’t seen as “friendly to China” due to lingering tentions over prior accusations of technology theft by companies such as ByteDance, maker of TikTok.

A Meta spokesman declined to comment on WSJ’s report. Tencent didn’t respond to a request for comment.

This isn’t the first time Meta VR hardware has made a splash on the Chinese mainland. In 2018, Meta (then Facebook) penned a deal with Xiaomi to release a Chinese variant of Oculus Go, sold by Xiaomi as the ‘Mi VR Standalone’. At the time, this was something of a quid pro quo, as Xiaomi was tasked with manufacturing Oculus Go, giving it exclusive rights to the mainland Chinese market as a result.

No such manufacturing deal is in place with Meta Quest 3, which is coming this Fall for $500. In the end, Meta’s current strategy seems less about getting its subsidized hardware into the country, and more about driving a wedge into the Great Chinese Firewall so it can once again tap into the world’s fastest-growing economy.

Tencent Reportedly Plans To Bring Meta Quest 2 To China

Tencent reportedly plans to bring Meta’s Quest 2 to China.

Last week Reuters reported Tencent is scrapping its own in-development VR headset due to the high cost of the project and internal projections that it wouldn’t be profitable until 2027. Chinese outlet 36Kr now reports that Tencent plans to work to bring Quest 2 to the Chinese market instead.

To sell many kinds of products in China, foreign companies must partner with a Chinese company or set up a local subsidiary. Tencent would thus sell and support Quest 2 in China, while the report says both companies would work together on localization and translation of Quest Store content. Tencent is also apparently discussing launching its own VR content on Quest.

As the report points out, this wouldn’t be a new type of arrangement for Tencent as it has already been selling and supporting the Nintendo Switch to the Chinese market since 2019. The executive put in charge of Tencent’s new VR venture is apparently the same one who handled the Nintendo partnership.

The report also claims Tencent had battled with ByteDance to acquire the Chinese VR market leader Pico in 2021 but lost because ByteDance’s bid was significantly higher. Given that Pico last year expanded from the China market into several western markets like Europe and Japan, it’s interesting that Meta could now be poised to take on Pico in its home turf. Meanwhile, Pico is reportedly laying off hundreds of staff just four months after the release of Pico 4.

No timeline is given for when Quest 2 could launch in China in the report, which begs the question: with Quest 3 less than 10 months out, why wouldn’t Tencent just wait for it first?

Tencent Reportedly Scraps VR Headset Development

Tencent is allegedly scrapping development for a new VR headset due to profitability concerns and high investment costs.

After setting up an internal XR unit to create VR software and hardware last June, Reuters reports that’s been scrapped and the unit’s 300 staff members are being told to seek other employment opportunities. Citing anonymous sources, it’s said Tencent’s internal economic forecasts suggested this venture wouldn’t be profitable until 2027. It’s also claimed that the unnamed VR headset lacked promising games and non-gaming applications.

It doesn’t sound like development got particularly far, either. The report suggests Tencent got as far as creating a “ring-like hand-held game controller” concept, though short-term profitability worries, high investment costs and a “sobering economic outlook” within China saw the multinational conglomerate reconsider this approach. “Under the company’s new strategy as a whole, it no longer quite fit in,” one source is quoted as saying.

Tencent aren’t strangers to virtual reality and investments go as far back as 2015, later live-streaming VR concerts for music artists. Reportedly, Tencent’s renewed interest in VR came in 2021, following new developments with pancake lenses and improved displays, which was further encouraged by high Meta Quest 2 sales.

This doesn’t signal an end to Tencent’s investment in VR, however, with stakes in both Epic Games and Skydance Media, whose gaming division Skydance Interactive developed Archangel: Hellfire, The Walking Dead: Saints & Sinners and Chapter 2: Retribution, alongside upcoming action RPG Behemoth. More recently, Tencent participated in Skydance’s $400 million strategic investment round last October.

Report: China’s Tencent Forms XR Unit to Build Its Own Metaverse

Tencent, the China-based multinational known for WeChat and a host of mobile games, reportedly announced to staff that was creating a unit dedicated building out its XR offerings.

As reported by Reuters, Tencent allegedly told staff on Monday about the official formation of a unit tasked with building up its XR business, which is said to include both software and hardware projects. The internal XR unit was supposedly launched in secrecy earlier this year.

Tencent Games Global’s Chief Technology Officer Li Shen is said to head the unit, and it will be a wing of its Interactive Entertainment business group. It’s also said the company is aiming to hire over 300 staff members to fill various XR roles.

The report maintains that Tencent founder and chief executive Pony Ma views the XR unit as a passion project, underling the importance of the metaverse by dubbing it in 2020 an “all-real internet.” Tencent has yet to comment on the information alleged in the report.

This follows continued downsizing by Tencent, first announced in May. At the time, it was said the Shenzhen-based company would reduce its headcount to between 10%-15% this year alone.

At least within China, it seems Tencent is primarily looking to compete with TikTok parent company ByteDance, which acquired Chinese VR headset creator Pico Interactive for an estimated $775 million in August 2021.

However with ByteDance pouring millions into VR developer support, it’s clear the target is a wider launch in Western markets, with the company’s Quest 2 competitor, Pico Neo 3 Link, now available in Europe and coming soon the United States.

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