What makes China ripe for virtual reality?

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China has the potential to be at the epicenter of VR innovation and adoption. In fact, it already is.

A February report from eMarketer shows revenues from hardware, software, content and other services associated with virtual reality in China reached RMB180.0 million (US$28.89 million) last year – almost four times VR spending in 2014.

The report is based on research from Analysys International Enfodesk which predicts VR revenues in China will grow a further 372.2% this year, to hit US$136.46 million.

Virtual Reality in China_eMarketer_204416

The report points out that the industry remains in its infancy and market potential, particularly around VR games, software and other types of content, remains unpredictable.

Francis Lam, chief innovation and technology office of Isobar China Group, says virtual reality might be only just taking off in China, but it is taking off fast.

“We’ve already seen a lot of VR hardware, 360 videos, games and even end-to-end solutions coming up in the market. China’s low-cost manufacturing advantage might possibly help bring it to the masses even sooner than other leading markets,” says Lam.

The expectation is that VR in China will accelerate even further this year once online Chinese video site YouKu launches its 360 platform – similar to the channel launched by YouTube in July 2015.

Other major players, including online video platform iQiyi, and technology giant, Tencent, are also developing their own VR hubs and partnerships.

Beyond the country’s ability to manufacture high-volume, high-quality products at low costs, a number of other forces bode well for China as a leader in VR adoption and innovation.

“Right now China is a market that likes to leap frog and we’ve seen this in the adoption of mobile – Chinese consumers want the best,” says Alvin Wang Graylin, China regional president of VR, HTC.

He adds that China’s start-up scene is flourishing, backed by large flows of capital. The industry also has the support of government. (Last year’s Fifth Plenary Session earmarked innovation as the core of the Chinese government’s next five-year development plan.)

“When the Chinese government puts its mind to something, it really does it, and VR is one of those areas. In the area of innovation, China will be taking a new leadership position in the marketplace,” Graylin adds.

In addition, China has the potential to be as creative as western teams, with the advantage of manpower.

Add to this rising Chinese consumer levels and the country’s reputation for rapid adoption of new technologies. Chinese consumers are also tending to be more nationalistic in their purchases. There is a preference for Chinese-made brands if they are well produced and competitive. Look to the growth in sales for Chinese mobile and computer makers Xiaomi, Huawei and Lenovo. What does this mean for VR in China? As Graylin points out, the more people who are using the technology and buying it, the more the industry will develop.

Challenges

The industry is in its infancy, and challenges abound.

Frame rate is important in VR, says Isobar’s Lam. “If your system cannot deliver at least 60 frames per second, it will probably cause motion sickness and jeopardize the whole experience,” he says.

Therefore, 3D content needs to balance visual fidelity and frame rate. It also requires special storytelling and production techniques. Other areas to consider are 3D audio and haptic technology.

“It’s important as creators to deliver high quality work so that the experience won’t be ruined. VR is simple, but great VR takes tremendous effort and skills,” says Lam.

Brands

For agencies, the big appeal of VR is how to use it to amplify events, says Eugene Chew, chief digital officer, J. Walter Thompson Shanghai.

Sports and gaming in particular will drive VR.

“These will be key areas where people already spend a lot of money on tickets or the best games – and these will be the same people prepared to spend on the head gear for that really immersive experience,” Chew says.

Here are brand examples from sectors that will lead the VR revolution:

1. Sports

Imagine the ability to transport people into the point-of-view of a player on the field or with a bird’s eye view from the sky?

This is exactly what Nike did with a novelty VR campaign with Brazilian football player Neymar da Silva Santos Júnior. (Be sure to watch the following videos in Google Chrome for the full 360 video effect.)

2. Auto

Isobar’s CoDriver Australian team worked with General Motors to create content for a number of global markets.

Here is how they created an in-vehicle virtual experience. In addition to visual content, it included seat vibrations and engine sounds to enhance the ‘test drive’ experience.

In the video, Dave Budge, creative executive director, Isobar Australia, explains how the experience was so effective, visitors got excited about the vehicle, rather than the virtual reality technology.

Here is another example from HTC Vive’s partnership with Audi at CES in January.

Users could select the make or model from an iPad and then customize the car’s exterior and interior. Then, using the VR headset, they could walk around the virtual car checking out everything from the wheels to the inside of the car’s hood.

3. Travel & Hospitality

In January, lifestyle travel platform Zanadu (backed by Tencent) launched a VR content app. The app offers affluent Chinese travelers experiential views of a number of global travel destinations.

“When you shoot in 360 you really need to understand how to bring the scenes to life, how to make them really interesting, telling a story to be really immersive, says Dirk Eschenbacher, co-founder and creative director, Zanadu, in a making of “The Dream” video.

Here is Zanadu’s “The Dream”, shot in Thailand.

Here’s one from Tourism Australia to promote the Whitsunday Islands.

4. Real estate

Real estate will be another industry to benefit. Imagine being able to show a potential buyer a property in another country.

In it they could choose the color of the wall paint, or the drapes, and check out the kitchen or bathroom fittings and even the view.

5. Fashion

In 2014, JWT Shanghai worked with Michael Kors on its Jet Set Experience campaign, to celebrate the brand’s first China flagship store.

The event was held in a 30,000-square-foot jet hangar and invited 1,000 guests and celebrities.

Fans could follow the event on a dedicated website or on WeChat. A 360-degree version of the event was then launched several days later for viewing via a mobile app.

“Virtual reality is not just 360 video – this is VR in its most basic form. A true immersive activity allows you to interact with the content and interact in ways that were not previously possible,” says Graylin.

The key is ensuring the technology and content providers work together as the industry evolves.

“Technology can be great, but without the content there is no experience for the user,” he says.

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