Pico’s odyssey: Fall from favor highlights mismatch of Meta’s technique in China’s VR business (Half 2 of 4)

This story is the second a part of a four-part sequence that delves into the elements resulting in ByteDance’s resolution to reduce Pico, its digital actuality enterprise. The primary half examines ByteDance’s gradual change in stance towards Pico’s potential and the way it has not too long ago overhauled the enterprise. Learn it right here.

Because the “pioneer” of the VR business, Pico’s first step was to closely put money into gaming assets.

The VR business confronted a frightening problem: a dearth of content material resulting in stagnation in VR shipments. The vicious cycle ensued—restricted VR content material resulted in builders struggling to monetize the platform, making a smaller content material pool and discouraging person purchases.

Meta was the one firm that adequately bridged this hole, notably with the Quest 2. It broke by by aggressively buying VR gaming content material and using pricing methods that made content material inexpensive. The outcomes had been important, propelling Meta to push VR shipments into the tens of hundreds of thousands—an unprecedented achievement within the decade-long historical past of the VR business.

Naturally, Meta grew to become the benchmark for China’s content material giants, with Pico carefully following swimsuit and making substantial investments. From its acquisition by ByteDance in September 2021 till June 2022, Pico mirrored Meta’s strategy by prioritizing gaming content material. To handle the content material hole, Pico constantly launched imported video games and developed in-house titles.

The tempo of sport additions on Pico was notable, beginning with roughly 200 video games post-acquisition—half of Meta Quest’s choices. Nevertheless, Pico swiftly doubled its sport library, introducing 2–4 new video games weekly, aligning with Meta’s catalog.

Huang Wei, an worker in Pico’s gaming division, stated that “Pico has imported nearly 60–70% of the video games on Meta,” emphasizing the aggressive nature by incorporating this comparability into its goal and key outcomes (OKRs).

Video games had been categorized into 4 ranges: S, A, B, and C, with Pico prepared to pay substantial entry charges for S-level video games. In keeping with Huang, past introducing new video games, Pico invested generously in gaming operations and arranged detailed actions to gather suggestions and improve person engagement.

Pico’s funding in new sport titles amounted to lots of of hundreds of thousands of RMB, paralleled by ByteDance’s technique to imitate Meta by intensive advertising and aggressive value subsidies for {hardware} units.

Pricing-wise, Pico mirrored Meta’s Quest 2, launching Pico Neo 3 and Pico 4 at a loss within the RMB 2,000 (USD 282) value section, initiating a value struggle in a market the place VR units sometimes offered for RMB 3,000–4,000 (USD 420–560).

In advertising, ByteDance leveraged its complete ecosystem, saturating Douyin, the Chinese language equal of brief video platform TikTok, with Pico ads and influencer endorsements. Ambassadors Leah Dou, a singer-songwriter, and Solar Yingsha, the world’s prime desk tennis participant, adorned high-traffic areas in Beijing and Shanghai.

In keeping with a person from the cellular business, the advertising bills for Pico 4 rivaled these of cellular producers that ship hundreds of thousands of units, signifying ByteDance’s dedication to Pico’s success.

Pleasure buzzed inside Pico in 2022, however ByteDance’s prime administration carefully monitored the scenario. Gross sales and weekly person actions had been scrutinized incessantly, with excessive expectations set for Pico 4—aiming for two million items offered yearly and a 50% weekly person engagement price.

Nevertheless, Pico quickly realized that blindly emulating Meta’s strategy wasn’t efficient in China. Chinese language players, accustomed to free cellular gaming choices with in-app purchases, posed a problem to the paid gaming mannequin adopted by Meta. Customers on Pico most popular taking part in pirated video games without cost, spending solely a median of RMB 40 (USD 5.6) per sport, a 3rd of Meta’s common.

Makes an attempt to transpose the cellular gaming mannequin to VR, exemplified by iQiyi Good’s failed content material aggregation strategy, highlighted the challenges. Pico confronted difficulties all over the place in adopting this path, with the VR gaming improvement ecosystem primarily in Europe and the US, limiting the negotiation energy of Chinese language corporations.

Pico’s failure to know the intricacies of the bottom-level content material mannequin rendered its excessive advertising and reductions ineffective. The advertising conversion price stood at a mere 2%, with Pico 4’s advertising value per unit reaching RMB 1,300 (USD 183), regardless of being offered for RMB 2,500 (USD 352).

Regardless of Chinese language VR corporations wanting as much as Meta as a job mannequin, there may be an inherent ambivalence, with Meta being concurrently considered as a nemesis. Inside Pico, staff categorical their ambition with phrases like “battling Meta and trampling on Apple” and “taking two years to struggle towards Zuckerberg,” underscoring their fervor and dedication.

In the end, Pico’s resolution to withdraw serves as a poignant reminder that merely replicating the Meta mannequin carries limitations and doesn’t assure success. The complexities of the VR panorama, coupled with the distinctive dynamics of the Chinese language market, demand a extra nuanced and strategic strategy past emulation.

Word: Some worker names could have been modified to guard their identities.

The third a part of this sequence examines ByteDance’s gradual change in stance towards Pico’s potential and the way it’s overhauling the enterprise. The article shall be revealed on December 5.

KrASIA Connection options translated and tailored content material that was initially revealed by 36Kr. This article was written by Qiu Xiaofen for 36Kr.

admin

Leave a Reply

Your email address will not be published. Required fields are marked *