Meta Enters Preliminary Deal with Tencent to Launch New VR Headset in China

Meta Platforms Inc. META, a major technology firm known for connecting people through its array of digital platforms and devices, has revealed plans concerning its virtual reality (VR) business expansion in China by striking a preliminary deal with Tencent Holdings Ltd. TCTZF. This partnership is set to introduce a more affordable VR headset to the Chinese market, signalling Meta's first notable venture in China since the banning of its platforms over a decade ago.

Technology Partnership

According to reports by the Wall Street Journal, the collaboration with Tencent, a leading Chinese multinational conglomerate, will allow Meta to utilize Tencent's distribution networks to sell its newly designed, budget-friendly VR headset. The exclusive distribution rights within China belong to Tencent. From late 2024, Chinese consumers will have access to this latest technology offering from Meta. The strategic move grants Meta entry into one of the largest consumer markets in the world, potentially rejuvenating its VR sales performance.

Revenue Sharing Model

The agreement between these two tech giants involves a unique revenue-sharing arrangement. While Meta will garner the majority of the sale proceeds from the VR device, Tencent expects to profit predominantly from the content and services linked to the use of the headset. Despite being in the early stages and susceptible to alterations, the current arrangement displays a mutual effort to capitalize on the significant market potential.

Market Expansion Amidst Regulatory Obstacles

This market expansion comes not without challenges, as China has increased its regulatory oversight on digital content, including videogames. Overcoming these regulatory hurdles will be essential for Meta and Tencent to successfully introduce this new product. The development of the less expensive headset aligns with Meta's broader strategy to release the hardware in other global markets, thus offering a diversified product range catered to different economic segments.

Meta, headquartered in Menlo Park, California, continues to develop innovative products, aiming to keep people connected globally through its virtual reality headsets, in addition to its mobile device and PC offerings.

Meta, Tencent, China, VR