Credit：Visual China

Tencent has previously dissolved its team working on XR and began to rebuild the team since August, prompted by the launch of Vision Pro, Apple’s first XR headset starting at $3,499 that is set to launch in early 2024, according to a video recently posted at Bilibill by Dianwankeji AK, a technology blogger at the popular Chinese video streaming platform with around 524,000 followers.

The video,which stirred speculations in VR sector, said Tencent also planned to act as a franchisee of the VR headset Oculus Quest in China, and sealed partnership with the device’s developer Meta Platforms Inc similar with that with Nintendo. Tencent became Nintendo Switch’s authorized distributor in the Chinese market in December, 2019. The partnership allows Tencent to release Switch console and develop offline sales channels in China.

Chinese digital news media outlet Jiemian confirmed the aforementioned news from multiple people familiar with the matter. In an internal email at the beginning of September, Tencent announced establishment of a business division of XR device and content under Tencent Interactive Entertainment Group (IEG), which takes charge of development, sales, marketing of Tencent’s own XR device and creating relevant content ecosystem, Jiemian reported. Qian Geng, General Manager of the PC game platform under IEG, was reported to be the new division’s leader and report to the Senior Vice President Ma Xiaoyi. Qian also serves as IEG Global Head of Jupiter Publishing and reports to IEG Global CEO Liu Ming.

As the world’s best-selling VR headset, Oculus Quest has not been launched in mainland China so far. Tencent has completed discussing all the details of the Oculus Quest franchise except signing agreement, Jiemian’s sources said. While Tencent will not to sell Quest 3, Meta’s latest offering on sale in September, the Quest 2 it was authorized to distribute would be an updated version powered by the new chipset, reported Jiemian, adding that the VR device is highly likely go on sale with new brand name in Chinese market. The new XR division of Tencent is not just made for distribution of Meta’s device as the company will continue development of its own project, the sources said, without elaborating details of such project.

The recent news suggested Tencent had overhauled its strategy on metaverse at least second times over the past months. A number of reports about eight months ago revealed the internet giant dropped its in-house development on XR and mulled distribution of Oculus Quest 2 in China.

36Kr said in February that some of teams at Tencent’s XR unit had been disbanded, and more than 300 employees affected would have two months to apply for new roles inside the company or find new jobs outside. The XR unit, founded in last June, has partially stopped operation in January after Shen Li, its key figure and head, resigned in last November. As one of few with development experience of VR hardware in Tencent, Shen joined in the company’s VR project in 2016 and launch of sensors and head-mounted display (HMD). The report noted that Qian Geng, the interim general manager who succeeded Shen, also serves as leader of Tencent’s gaming partnership with Nintendo.

Reuters reported the same month that Tencent had decided to scrap plan to develop its own XR device as it found hard to achieve profitability quickly and still needed large investment to make a competitive product. The Shenzhen-based company expected XR project not to become profitable until 2027, and the unit was lack of promising games and non-gaming applications, according to the report. Tencent later responded that it didn’t abandon exploration on XR and the recent adjustment was made due to development of the industry.

Tencent has started talking with Meta months ago about introducing Oculus Quest 2 in China, and publishing Chinese version of existing videogames for the device, the Wall Street Journal cited sources in February. Tencent will introduce Oculus Quest 2 in China and their partnership will be similar with that between Tencent and Nintendo, 36Kr learned later that month.

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