Mark Zuckerberg’s Meta may also face off against TikTok’s parent company in the field of virtual reality (VR) and Metaverse, in addition to social networks.
TikTok’s parent company, ByteDance, and Facebook, both have expressed interest in the field of virtual reality (VR) and the metaverse. Both companies see potential in these emerging technologies and are exploring ways to incorporate them into their offerings.
Mark Zuckerberg, the CEO of Facebook, has made significant investments in VR technology through his company’s subsidiary, Oculus. Meanwhile, ByteDance has been exploring various VR technologies and is rumored to be developing a VR headset of its own.
Two years ago, ByteDance acquired Pico, a Chinese startup that makes VR headsets. The deal opened a new front in the Chinese company’s competition with Meta.
In fact, parent company Facebook and Instagram are also jostling for users and advertising revenue with TikTok as the short-video app grows in popularity.
The Race to Dominating the Virtual Reality and Metaverse Markets
According to industry data, Pico’s headphone shipments have skyrocketed, making it a small but fast-growing company second only to Meta in the global market. Pico has never sold its consumer headphones in the US.
In 2021, CEO Mark Zuckerberg changed Facebook’s name to Meta in part to reflect his bet on the metaverse, a more immersive version of the Internet that is experienced largely through virtual reality headsets.
The company spent a lot of money on that ambition. In its latest quarterly results, Meta says that there are more than 200 apps on their VR devices that generate more than $1 million in revenue per app. Still, overall revenue in Meta’s Reality Labs segment fell 17% in the quarter due to lower sales of the Quest 2 headset.
According to International Data Corp, Meta still held 90% market shares just about a year ago. By the third quarter of 2022 – the closest time period for which data is available – Meta’s market share had dropped to around 75%.
Pico’s market share tripled in the same year by approximately 15%. No other VR headset maker holds more than 3% of the market.
IDC data shows that Meta’s headset shipments in the third quarter fell 48% from a year earlier. ByteDance’s Pico is the only headphone maker to increase shipments, in a market estimated to be worth $4 billion by 2022.
A spokesperson for Meta said: “We are pleased that consumers have more ways to experience VR, because when they do, it helps foster the ecosystem, which in turn encourages developers to create and produce more great content.”
Pico’s obstacles to topping the market
ByteDance’s foray into the virtual reality headset market comes at a difficult political time for the company.
The Beijing-based business is on the radar of officials and politicians who have voiced concerns over the Chinese government’s use of TikTok data to spy on Americans.
TikTok’s app has been banned on federal government devices, while some Biden administration officials want to try to force the sale of TikTok to a US company.
Pico offers the headset for personal use in Europe and Asia, markets that are more open to devices from Chinese companies than the US.
Consumers in those markets were intrigued by Pico in part because last year, Meta announced a $100 price increase for the Quest model.
After the price increase, Quest 2 costs 399 USD. Pico’s mainstream consumer headphones retail for the equivalent of $450. Pico is also available in a number of foreign markets where Meta’s equipment was not available before.
The latest data doesn’t reflect sales of Pico’s newest consumer headset model, the Pico 4, which was released to positive reviews in October. Meta also released a new headset in October. 10, Quest Pro, which is aimed at professionals and retails for $1,500.
Competitive strategy is also getting hotter and hotter. Apple is expected to launch augmented reality headsets later this year, and Microsoft Corp. offers a mixed reality headset for businesses called HoloLens. The headphone market is expected to become a $16 billion industry by 2026, according to IDC.
“The space will become crowded with competitors with good potential. So it’s going to be very difficult for Pico,” said Rolf Illenberger, chief executive officer of virtual reality software company VRdirect.
Offering multiple apps is vital to making the VR platform compelling, and Pico is still in the early days of expanding its portfolio.
They currently have around 250 apps available – compared to more than 400 in the Quest app store. The company also introduced a social app called Pico Worlds, similar to Meta’s Horizon Worlds.
Could there still be hope for Pico?
Sonam Mobbs, a 40-year-old IT support worker in Northampton, UK, bought the Quest 2 headset on the day it launched in 2020. He played games every day with the device until Pico 4 was released for sale where he lives.
“The biggest difference I notice when you switch between the two is clarity,” he says. “The lens on the Pico 4 is better”. Mr. Mobbs, who says he spends at least five hours a week playing virtual reality games, put his Quest 2 up for sale on eBay three weeks after he started using the Pico device.
The company’s website says Pico was founded in 2015 and initially focused on business headsets. In May 2022, following the acquisition by ByteDance, Pico announced it would begin selling consumer devices in Europe and throughout Asia.
Previously, Pico only sold consumer headphones in China. Now Pico also sells higher-end headsets to businesses located in the US, as well as other markets around the world.
Glenn Kachmar, 55, of Vancouver, Canada, who teaches classes using VR, said he used Quest 2 until he heard about Pico last year. He ordered a device not sold in Canada, from Spain.
“The Pico is definitely a better headset in many ways,” he said, referring specifically to the screen resolution and the fit on the head. But he was reluctant to give up Pico’s product, saying their device didn’t offer as many games as Quest and that the games he had purchased weren’t ported to Pico.
Given the size and resources of both companies, a competition between Facebook and ByteDance in the VR and metaverse markets is not surprising. However, it is still too early to determine the outcome of this competition as these markets are still in their early stages of development and much can change in the coming years.
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