To re-establish its presence in the Chinese market after 14 years, Meta Platforms Inc. META has reportedly signed an initial agreement with Tencent Holdings Ltd. TCEHY, a renowned Chinese videogame company.
The collaboration aims to launch a cost-effective model of Meta’s virtual reality headset by the end of 2024.
What Happened: The new VR headset from Meta will be exclusively sold by Tencent in China, reported the Wall Street Journal, citing people familiar with the matter.
This tentative agreement marks Meta’s comeback to the Chinese market after an absence of over a decade. The budget-friendly headset will incorporate less expensive lenses than those used in the Quest 3, Meta’s latest model. However, it will feature a superior graphic processing unit.
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The VR headset is slated for sale in China through Tencent beginning in late 2024.
It remains uncertain whether Tencent will require formal governmental approval to introduce Meta’s VR device and content in China, given the absence of specific VR regulations in the country, the report noted.
Regarding revenue distribution, Meta will make more from the device sales, while Tencent will profit primarily from the revenue generated by content and services. The VR headset will offer games and various applications developed by Tencent.
The partnership has emerged amid a global decrease in VR headset demand and skepticism regarding the future of the technology.
Why It Matters: The agreement with Tencent is a significant move for Meta, which has been trying to re-establish its business in China for years. The company’s initiatives were hindered primarily due to the non-friendly image of CEO Mark Zuckerberg in China.
Meanwhile, the tech industry is witnessing a race to dominate the mixed-reality headset market, with companies like Apple Inc. launching their own headsets. Meta’s decision to reduce the prices of its future products is a strategic response to this competition.
This partnership could thus be a crucial step for Meta in solidifying its position in the global VR market.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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