China's virtual reality arcades aim for real-life success

A woman using a virtual reality or VR headset to play games at a Shanghai arcade. China had an estimated 3,000 VR arcades in 2016, and the market could hit 5.25 billion yuan (S$1.1 billion) by 2021.
A woman using a virtual reality or VR headset to play games at a Shanghai arcade. China had an estimated 3,000 VR arcades in 2016, and the market could hit 5.25 billion yuan (S$1.1 billion) by 2021. PHOTO: AGENCE FRANCE-PRESSE

SHANGHAI • Ms Chen Jiuxiao puts on virtual reality goggles and is immediately transported to a snow-covered ski slope, down which she slaloms without ever leaving Shanghai.

"I felt weightless skiing down the mountain," Ms Chen, 25, gushes after re-emerging in the material world. "The scenery around me was so authentic."

Ms Chen, a hospitality worker, said she ventured into one of Shanghai's virtual reality (VR) arcades due to word of mouth from her tech-savvy friends.

China had an estimated 3,000 VR arcades in 2016. The market was forecast to grow thirteenfold between then and 2021 to 5.25 billion yuan (S$1.1 billion), according to a report by iResearch Consulting Group and Greenlight Insights.

Add in the profits to be made from headsets, equipment, games and other products, and it is little wonder that the VR and augmented reality (AR) industries are excited about China.

"Chinese growth in the next five years could see it dominate AR/VR long-term - and not by a small margin," Silicon Valley consultancy Digi-Capital said in a report last year, adding that China "has the potential to take more than US$1 (S$1.35) of every US$5 spent" in the industry globally by 2022.

One key factor is China's government.

Tens of millions of Chinese have become obsessive players of mobile video games, causing concern that China was raising a generation of myopic youngsters addicted to battle games.

The authorities imposed curbs last year on the number of new game releases and playing time for the youth, rattling the industry and shaving billions off the market value of big players, including gaming giant Tencent.

But the government is also pushing for China to become a world leader in next-generation technologies such as artificial intelligence and autonomous vehicles.

VR has been lumped into that favoured class, benefiting from a slew of preferential policies.

Mr Chen Wei, manager of Shanghai VR arcade MacHouse, said VR was likely to avoid the fate of mobile video games in China.

He cites the relatively high cost of arcade play - up to 70 yuan or more for a 15-minute game - and of setting up home systems. "It's hard for minors to get addicted," he said.

The nascent VR games industry suffers from a shortage of high-quality games, however.

At Shanghai's VR+ Amusement Park, a new game lands only once every three months, its officials said.

Firms such as Tencent remain hesitant to dive into the arcade scene until the sector reaches critical mass, analysts explained.

But Tencent, along with fellow Chinese giants Alibaba and Baidu, is investing in virtual online shopping and VR entertainment, all of which could trickle down into gaming.

According to Chinese reports, a number of towns and cities in China have already declared themselves incubator zones that are integrating VR into research, manufacturing, education and other spheres to attract capital.

Seekers VR, based in the eastern city of Wenzhou, owns a franchised chain of 200 arcades in more than 70 cities across China.

It is working with the Wenzhou government to establish a college focused on educating students about VR, which will also use the technology in lessons.

"There is no dominant competitor in the VR industry since it is so immature, and we will bring more and more opportunity," said Seekers VR's chief executive Belle Chen.

China's expected wide-scale adoption of ultra-fast 5G networks is expected to further boost VR development and foster growth in areas such as education and training, said Mr Chen Wei.

"There is no better way to learn skills, and at a lower cost, than VR," he said. "Even though VR is still educating users about what it is, it could explode some day."


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A version of this article appeared in the print edition of The Straits Times on April 08, 2019, with the headline China's virtual reality arcades aim for real-life success. Subscribe