Virtual reality industry in China to soar over the next five years

The virtual reality industry will continue to grow in China over the next five years, according to a joint report released on Wednesday by JD.com, China’s leading e-commerce company, and market intelligence firm IDC.

The industry is expected to grow at a compound average growth rate of 75.5 per cent, with entertainment, education and health care its three key future directions, the report said.

The market size of China’s VR industry will triple this year to 5.66 billion yuan from 1.54 billion yuan last year, according to a white paper released by the Ministry of Industry and Information Technology.

Virtual reality immerses a user in an imagined world, like in a video game or film, with the aid of an opaque headset, such as the Oculus Rift and Google’s Daydream platform for upcoming Android smartphone models.

According to IDC, men under 35 in urban areas are the most likely consumers of VR products in China. Nearly 90 per cent of users have chosen current products priced at about US$30, indicating that the technology is still in the early stages and that high prices are a hurdle for many consumers. Some 58 per cent of users are moderately sensitive about the quality of virtual reality products.

In China, more than 90 per cent of affordable cardboard viewers are sold to the consumer market, while mid-range and high-end VR devices are mostly sold to the commercial market, such as offline experience stores in shopping centres.

So far, 55 per cent of VR content comes from game producers, 40 per cent from entertainment and only 5 per cent for industry applications, a sector which has huge potential for growth.

IDC predicts growing Chinese smartphone makers will enter the VR market following the introduction of Google’s Daydream, which is expected to lead to an increase in content and a shift in the sector’s future direction.

Main Chinese smartphone suppliers, such as Xiaomi, Huawei and ZTE, are already gearing up to release compatible handsets to the market.

In April, Huawei unveiled a virtual reality headset for its flagship P9 smartphone. In June, ZTE launched its Big Video 4K+ solution, which allows users to download on-demand virtual reality video on their devices at much faster speeds.

Meanwhile, venture capitalists continue to flock to China’s VR market after dozens of Chinese virtual-reality start-ups raised at least 10 million yuan each in funds since the start of the year.

More than 60 listed companies in China have entered the VR industry since July last year through investments in content developers and device makers, according to mainland media.

The number of people using VR content in China will exceed 1.4 million this year, according to estimates by iResearch, with the figure expected to more than double next year.