Asia Business Channel

China’s virtual reality arcades may be the future of “experience entertainment”

A woman plays a video game using a virtual-reality headset at an arcade in Shanghai

 

For Chinese looking for a new “experience” participating in the worlds of Augmented Reality and Virtual Reality (AR/VR) are becoming the a new, hot entertainment trend.

China had an estimated 3,000 VR arcades in 2016, and the market has been forecast to grow 13-fold by 2021, generating more $782 million USD, according to a market research report that was prepared by iResearch Consulting Group and Greenlight Insights.

Add in the profits to be made from headsets, equipment, games and other products, and it’s little wonder that augmented-reality and virtual-reality industries are excited about China.

Silicon Valley consultancy Digi-Capital said in a report last year that, “Chinese growth in the next five years could see it dominate AR/VR long-term – and not by a small margin. China has the potential to take more than $1 of every $5 spent” in the industry globally by 2022.” One key factor is China’s government. Tens of millions of Chinese have become obsessive players of mobile video games, which caused educators and government officials concern that China was raising a generation of myopic youngsters addicted to battle games. In response, authorities imposed curbs last year on the number of new game releases and the playing time for youths. The government’s new regulations rattled the industry and reduced the market value of technology players including gaming giant Tencent.

But now, as China pushes to become a world leader in next-generation technologies, it is including VR into a favored class of technologies that the government will support, that also include artificial intelligence and autonomous vehicles.

Chen Wei, manager of Shanghai VR arcade Machouse, said that Virtual Reality will likely avoid the type of regulations that are related to mobile video games in China because the high cost of arcade play – up to $10 USD or more for a 15-minute game – and the costs and difficulty of setting up a proper home VR arcade system prevents most minors from getting addicted.

According to Chen, the major factor that is currently holding back the VR games industry is that it suffers from a shortage of high-quality games. At Shanghai’s VR+ Amusement Park, only one new game is added each quarter, which stops AR “gamers” from coming more often to play.

Financial analysts report that internet firms such as Tencent are hesitant about making investments into the VR arcade scene until the sector reaches critical mass. But Tencent, along with fellow Chinese giants Alibaba and Baidu, are all making investments into virtual online shopping and VR entertainment, all of which could trickle down into gaming.

Already a number of towns and cities in China have declared themselves incubator zones that are integrating VR into research, manufacturing, education and other spheres, and are attracting investment capital into various AR/VR projects.

One company, Seekers VR, located in Wenzhou, owns a franchised chain of 200 arcades in more than 70 cities across China. The company says it is working with the Wenzhou government to establish a college focused on educating students about VR and is proposing to education authorities to use the technology in education.

Belle Chen, CEO of Seekers VR said in a media interview that, “There is no dominant competitor in the VR industry since it is so immature, and we will bring more and more opportunity.”

China’s adoption of ultra-fast 5G networks is expected to further boost AR/VR development and foster growth in areas such as education and training, said Chen Wei. He said: “There is no better way to learn skills, and at a lower cost, than VR. Even though VR is still educating users about what it is, it could explode someday.”

 

 

 

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