Meta Platforms is returning to China, 14 years after its Facebook platform was shut out of the country. However, Meta will be looking to attract Chinese consumers to its virtual-reality technology rather than its social-media platforms.
Meta (ticker: META) has reached a preliminary agreement to sell a lower-priced version of its VR headset via a partnership with China’s Tencent Holdings (TCEHY), The Wall Street Journal reported late Thursday, citing people familiar with the matter.
Meta…
Meta
Platforms is returning to China, 14 years after its Facebook platform was shut out of the country. However, Meta will be looking to attract Chinese consumers to its virtual-reality technology rather than its social-media platforms.
Meta
(ticker: META) has reached a preliminary agreement to sell a lower-priced version of its VR headset via a partnership with China’s
Tencent Holdings
(TCEHY), The Wall Street Journal reported late Thursday, citing people familiar with the matter.
Meta shares were down 0.9% in premarket trading on Friday.
If it won’t quite make up for Facebook being blocked in China since 2009 –Instagram and WhatsApp are also prohibited– the deal is a potential positive for Mark Zuckerberg’s investment in the metaverse and its vision of a world of virtual interactions.
Zuckerberg has said Meta’s priority is now artificial-intelligence technology. However, its Reality Labs division, which focuses on the metaverse, still lost $11.47 billion in the first three quarters of the year and its losses are expected to widen in 2024. Adding a significant consumer market could help allay concerns about the division’s spending.
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Shipments of extended-reality headsets came to more than 1.1 million units in China in 2022 according to Counterpoint Research and the domestic market is dominated by Chinese companies ByteDance and DPVR. However, shipments fell by 56% in the first half of 2023 compared with the same period a year earlier as Chinese consumers have pulled back on spending.
Meta’s headset for the Chinese market will use cheaper lenses than its latest Quest 3 model and sales are set to begin late next year. Meta will take a bigger share of revenue from device sales while giving Tencent a bigger slice of content-and-services revenue, according to the Journal.
Meta didn’t immediately respond to a request for comment on the report.
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Write to Adam Clark at adam.clark@barrons.com
