Tencent Is Making Deals With Meta to Market Quest 2 VR Headset in China

Tencent is in negotiations with Facebook parent company Meta to sell its famous virtual reality (VR) headgear in China, which has the largest number of internet users in the world.

According to the Wall Street Journal (WSJ), China's largest gaming firm Tencent has reportedly suggested to Meta that it become the sole vendor of Meta's Quest 2 VR headsets in China. Apparently, Tencent has also looked at publishing Chinese translations of already-existing videogames on the gadget.

Ongoing Negotiations

WSJ's sources indicated that the talks, which have been going on for a couple of months, are still in the preliminary stages and that an agreement may not be achieved.

The report states that the transaction between the two largest tech giants in the US and China might attract attention from both Washington and Beijing.

There could be a number of obstacles that would need to be resolved before the cooperation could go through. The two firms would also have to contend with China's stringent gaming rules.

For the time being, the headgear and its associated software are not officially accessible in China.

Consumers in China may purchase gadgets from parallel importers on e-commerce platforms like Alibaba's Taobao and JD.com. They would need to set up the headsets and download programs using a virtual private network (VPN) to avoid China's internet firewall.

WSJ said the conversations were first reported by the Chinese technology news website 36Kr.

Meta's Presence in China

If the transaction goes through, it would be a major step for Meta to reconnect with Chinese users after the company has had a hard time breaking into the market since Beijing blocked Facebook in China in 2009. When Facebook was restricted in China, Meta continued to operate, with a primary emphasis on attracting Chinese marketers that target customers in other countries.

Meta has a presence in Shanghai, where the company is now seeking qualified engineers to work on its virtual reality products.

The VR Market

During the last two years, there has been a surge in interest throughout the world in the metaverse, a more immersive version of the internet viewed mostly via VR devices.

Meta now dominates the VR headset market, but TikTok developer ByteDanc has its sights set on overtaking the market with its smaller competitor Pico.

Pico, located in Beijing, has been investing in digital marketing and giving discounts to consumers to increase sales.

It is reported that Meta's market share dropped to 80% last year from 85% the year before, while Pico's increased to 10% from 2%.

Recently, Meta reported that sales of its Quest 2 VR gear, which was introduced in 2020, contributed to a 17% year-over-year fall in revenue for its Reality Labs division. Reality Labs houses the company's VR business.