TAIPEI / TOKYO – Facebook and Sony are preparing to boost production of upcoming gaming devices by up to 50%, showing how big tech companies are benefiting from consumers’ thirst for home entertainment during the pandemic world of coronavirus, according to the Nikkei Asian Review.
Oculus of Facebook, the world’s leading provider of virtual reality headsets by market share, is considering at least 50% growth from a year ago for its latest version of head-mounted VR devices, taking production to 2 million units, sources said.
Meanwhile, Sony, the world’s second-largest maker of video game consoles after Nintendo by shipping, has also raised production orders for its next PlayStation 5 to around 9 million units, from the roughly 6 million units it had planned in spring, sources familiar with the matter said. The PlayStation 5 is the completely new first generation of the console in seven years, after the Japanese company released the PlayStation 4 in 2013 and an update in 2016.
The optimism of the two big tech companies is a strong signal for a wide range of providers in the entertainment segment for the second half of 2020, as many players in the tech industry are still looking for ways to offset the smartphone market in decline, the largest consumer electronics device. .
Facebook’s move further underscores the social media giant’s ambition to further expand its presence in the emerging virtual reality market, where it is the market leader with a market share of around 35%. Its first all-in-one VR gaming system, Oculus Quest, became a hit after its launch in May 2019.
“Compared to the declining smartphone market, virtual reality is still a nascent market, but we see strong growth for this year and more and more companies are entering the arena. The production forecast for the second half of this year it could reach at least two million units, which is already around 1.5 times more than its total production last year, “a source with direct knowledge told Nikkei Asian Review. “The new Facebook Oculus VR headsets will go into mass production in late July.”
But orders may still be subject to change, up or down, depending on market demand after the product launch, the sources said.
Compared to the relatively mature cyclical market for game consoles, dominated by Nintendo, Sony and Microsoft, market watchers said virtual reality was still a nascent market where many gamers are testing new applications. But games are still the most important segment.
“During the pandemic, the gaming industry witnessed a record number of online gamer additions as more consumers are considering playing for home entertainment,” Counterpoint senior analyst Karn Chauhan told Nikkei Asian Review.
Facebook bought the startup VR Oculus for $ 2 billion in 2014, and got its first hit with Oculus Quest, which had a starting price of $ 399. It was the company’s first all-in-one VR gaming device. Also known as “stand-alone,” this type of device features computing capabilities built into a wireless headset, rather than relying on a personal computer with a cable to run the device.
Facebook seeks to further expand independent virtual reality, giving users a more immersive experience than PC-based virtual reality headsets and smartphones. The American company said in June that it will stop selling Oculus Go, its entry-level VR device that went on sale in 2018, to focus on the offerings of Oculus Quest and Rift, its most powerful and high-end products. Oculus Rift S, introduced in 2019, still needs to be connected to a computer to function.
Facebook’s founding CEO Mark Zuckerberg said at a earnings conference earlier this year that the company’s revenue classified as “other” reached $ 297 million for the January-March quarter, 80% more than a year ago. year, which was “driven primarily by sales of Oculus products”.
Other companies are competing for a share of the market. HTC, previously a leading smartphone maker, shifted its focus from phones to virtual reality, while Sony launched its first PlayStation VR in 2015. Google, Samsung Electronics, and Huawei Technologies introduced phone-based VR headsets, using phones Smart as VR headsets screens.
Apple has been working on augmented reality technology for years and reportedly recently entered trial production for an augmented reality device, according to tech news outlet The Information. Virtual reality places users in a fully artificial digital environment, while AR superimposes virtual objects on a real-world environment.
However, no immediate winner has emerged on the nascent battlefield, market watchers said, and the VR headset market is still in its infancy for gamers and commercial users in some niche applications only. The technology is based on high-speed, low-latency Internet connectivity, and 4G connectivity does not always meet user expectations.
Providers are working to reduce the weight of the devices to improve the user experience. Market watchers also said that more content providers, such as game developers, needed to create a larger virtual reality ecosystem.
Worldwide shipping for all types of VR devices last year was around 10 million units, according to Counterpoint data. Facebook, Sony and HTC together accounted for 69% of the market. But excluding mobile virtual reality, which needs to plug in a smartphone, the total virtual reality market shipping was only 4.32 million units, and Facebook shipped around 1.5 million units in 2019, the agency said. TrendForce research.
Jason Tsai, an analyst at TrendForce, said the virtual reality market is enjoying healthy demand thanks to the coronavirus outbreak, but it was not yet clear if the momentum was sustainable.
“Overall, the VR market will continue to grow. Facebook’s growing momentum this year will be stronger than Sony’s VR line, as Facebook’s strategy is to sell its VR devices at a relatively affordable price from last year to grow the ecosystem base, and not only targeted players, but also has a greater hope of exploring other business opportunities and applications, “said Tsai. “Sony’s focus today is to attract more hard players to group together with their own PlayStation game console business.”
Sony and Facebook declined to comment.
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