Meta Platforms, formerly known as Facebook, is making a comeback in China after being blocked for 14 years. However, this time Meta is targeting Chinese consumers with its virtual-reality (VR) technology rather than its social-media platforms.
According to sources familiar with the matter, Meta has entered into a preliminary agreement with Tencent Holdings, a Chinese conglomerate, to sell a more affordable version of its VR headset in China. This move is seen as a potential positive for Meta’s investment in the metaverse, a virtual world where people interact and engage with one another.
While Facebook, Instagram, and WhatsApp remain unavailable in China, Meta’s focus on artificial intelligence (AI) technology has gained momentum. Nonetheless, Meta’s Reality Labs division, which specializes in the metaverse, has incurred significant losses totaling $11.47 billion in the first three quarters of this year. With an expanded consumer market in China, Meta hopes to address concerns about the division’s financial performance.
According to Counterpoint Research, China witnessed over 1.1 million shipments of extended-reality headsets in 2022. However, in the first half of 2023, shipments dropped by 56% compared to the same period last year due to reduced consumer spending. Chinese companies ByteDance and DPVR dominate the domestic market for extended-reality headsets.
To cater to the Chinese market, Meta plans to release a headset with more affordable lenses than its latest Quest 3 model. Sales are expected to commence late next year. As part of the agreement with Tencent, Meta will receive a larger share of revenue from device sales while Tencent will have a larger portion of content-and-services revenue.
Meta has not yet provided a comment on the reported partnership with Tencent.