Chinese online video provider LeTV Holdings Co Ltd launched its first ever virtual reality (VR) headset on Wednesday, as it believes the market potential will be stimulated as big as the country's flourishing smartphone sector.
Virtual reality, also known as computer-simulated life, first appeared in science fiction in the 1950s, and was developed for medical use, pilot simulation and military training in the 90s.
The industry really began capturing the public's imagination last year with the launch of the American virtual reality technology company Oculus VR's Rift headset, considered the first truly immersive VR headgear to be used with video games.
"Few companies will fully handle VR business as selling the product requires premium hardware design, powerful cloud computing support and fruitful content," said Ablikim Ablimit, vice-president of strategy management at LeTV. "Thanks to LeTV's Internet ecosystem, the company will drive the trend of VR device mass production in the consumer market."
According to LeTV, it will focus on integrating the industry's resources and benefiting all the partners who work on its LeVR platform.
The company said it is also working to bring VR movies, video games, education and sports broadcasting services to its users in the coming years.
During the event, a strategic cooperation agreement has also been signed between LeVR technology Ltd and Chinese new industrial city operator CFLD in building a technology development zone at DachangChaobai River Development Area, which is located 30 km East of Beijing's Central Business District.
No specific volume of the investment was revealed at the product launch event.
Currently, there are two types of VR headsets sold on market -- Mobile base VR and all-in-one VR. The former needs a smartphone to insert in front of the device as a display while the latter requires a PC or game console to support it.
"The mobile VR headset and all-in-one VR headset are different in terms of functions, so they are designed for two separate consumer markets," said Wang Jingyi, Analyst of interactive entertainment division of iResearch Group.
According to Wang, the difference in the customer market between the two types of VR headsets will imply that the mobile VR headset will gather a wider range of users. However, the ideal product for a VR headset is a real all-in-one device, without support from external accessories such as smartphones or computers and one that operates its display and data processing.
China's VR market has only really taken off, however, since Facebook agreed to buy Oculus for $2 billion in cash and stock in March last year.
"In 1995, Chinese started to pay attention to the VR industry. However, most of the R&D is focusing on B2B sectors, or applies to professional projects within the industrial field," said Weng Dongdong, an associate professor at the Center for Research on Optoelectronics, Information Technology and Color Engineering at the Beijing Institute of Technology.
Prior to LeVR, there were already plenty of competitive VR gadgets: Lingvr, 3Glasses, Antvr kit, Baofeng magic mirror and DëePoon.
According to LeTV, the company has already signed deals with Lingvr, Antvr and 3Glasses. Lingvr will exclusively work with LeVR to promote the latter's VR app -- Le Shijie and LeTV's video content will be exclusively provide to Antvr kit.
The new headset is priced at 149 yuan ($23), and is currently only compatible with LeTV's native smartphones.
The company will launch an upgraded generation for the other brand phone users and a premium all-in-one VR device will also be unveiled in the first half of next year.
According to BI Intelligence, a research and information service provider operated by the Business Insider, the compound average growth rate of the VR hardware market is expected to be 99 percent from 2015 to 2020.
It also predicts that the global VR hardware market will hit $2.8 billion by 2020, while its revenue for last year was just $37 million.
There are no obvious technical gaps between western technology multinationals and domestic startups, as three of the key aspects in the VR development process, interior R&D input exterior market investment environment and consumption demands have spaced out the differences.
"From the global perspective of the market, both China and the world are still in the early development stage of the VR industry. A star product that attracts a large number of consumers hasn't appeared in any of the markets," said Wang. "The investment environment is more flexible overseas and more funds have been invested in this area. The $2 billion acquisition by Facebook to purchase Oculus is an example that exactly supports this."
In terms of the buyer behavior, VR product has not been well recognized by Chinese yet. Being as a price-sensitive market, take the video game console as an example, the market penetration rates of game consoles such as the Sony PS4 and Microsoft Xbox One are much higher in western countries than they are on the Chinese mainland, and similar to that, consumption demand and consumption power for high technology in high price products in China is lower than in Western countries.
Several key elements will play a vital role on the users' experience, elements such as: content building, the device's weight, display resolution, visual angle, screen refresh rate, interactive mode and spinning sensation. These will finally become the development bottleneck of VR gears.