ByteDance acquires Pico: a big step into metaverse?

Aug 31, 2021 Artificial Social

Is virtual reality finally getting ready to be the next big thing?

According to SCMP, ByteDance has completed the acquisition of the third-largest virtual reality headset maker Pico, in what could be a big step in the layout of metaverse for the company.

Actually, in March this year, Roblox, the first stock of metaverse, closed up 54.4% on its first day of listing, and its valuation doubled to $45 billion from $4 billion a year ago.

In addition, the metaverse has attracted a host of bigwigs such as Pony Ma (Huateng) and Zuckerberg to compete for the first layout. Zuckerberg also formally introduced the concept of metaverse at the recent earnings meeting and pointed out the key role of Oculus as the entrance to the field.

This also catches Zhang Yiming's attention. Recently, ByteDance is rumored to have invested 5 billion yuan ($771 million) in acquiring Chinese VR hardware maker Pico. If the deal is struck, its entry path is somewhat similar to that of Facebook. Back in 2014, Facebook had spent $2 billion to acquire Oculus VR as a strategic business layout.

Bloomberg cites "a person familiar with the matter" in saying the Chinese giant is in talks with Pico about a potential acquisition. These talks are reportedly ongoing, with a final decision yet to be made. A person close to the deal said, "the acquisition may be able to reach 9 billion yuan ($1.5 billion)."


The third-largest VR headset maker Pico has received 4 rounds of financing

After a round of capital winter, there are few independent VR producers left in the VR industry, and Pico is one of them.

Public information shows that Pico is a VR hardware and software research and development manufacturer, dedicated to the research and development of virtual reality hardware and software and the creation of virtual reality content and applications, providing users with a full experience from end to end products and services. The products that have been developed include Goblin VR, Pico U VR, and Tracking Kit.

In addition to the limited selection of targets, Pico itself also has the will to sell, its founder Zhou Hongwei once said: "I think some Chinese games and Internet giants are bound to have input in the VR field, we hope that at that time Pico is the best, with them a partner or an investment target."

However, the real reason that boosts the deal is Pico's hard strength.

In May, Pico launched their new VR all-in-one machine Neo 3, whose sales exceeded 10 million within 24 hours. The device continues the advantages of the 2 generations, supports 6DoF. Compared to 3DoF, the increase in spatial displacement means the expansion of the use of scenarios, the user experience can be extended from static video viewing to dynamic VR game experience.

Different from the previous generation of double fisheye environmental cameras. Pico Neo 3 upgrades to 4 wide-angle cameras, located on the four sides of the front panel of the eyepiece, without the need for external positioning of the base station. Coupled with accurate tracking algorithms and thousands of hours of performance testing, it brings a more stable user experience, which greatly enhances the immersion during VR interaction.

In addition to technical advantages, Pico's sales performance is also noteworthy. According to reports, Pico's cumulative sales have reached about 500,000 units. According to the IDC report, Pico ranked first in China's VR market share in 2020, including a high share of 57.8% in Q4.

In addition, the capital market has high expectations for Pico's development, and the company has received 4 rounds of financing so far.

The latest round of financing occurred in March this year, Pico announced the completion of $37.4M Series B+ financing, with investors including Cornerstone Capital, China Merchants Capital, CCB International, and others. After the completion of this round, Pico has raised a total of $67.23M in its Series B and Series B+ funding.


The founder of Pico comes from GoerTek, which also plays the role of ODM

Pico was established in 2015, with a registered capital of 35 million yuan, and the legal representative is Zhou Hongwei. Zhou Hongwei is an entrepreneur of GoerTek and worked in GoerTek for 10 years before starting his own business, mainly responsible for the hardware R&D team in Qingdao.

In terms of shareholding structure, Pico department in Qingdao holds 100% of Pico. The legal representative and chairman of Pico is Jiang Long, who is the brother of Jiang Bin, the chairman of GoerTek. Jiang Bin is also the actual controller of Pico department in Qingdao, with a total equity ratio of 35.51%.

Among them, GoerTek is the largest shareholder of Pico department in Qingdao, accounting for 26.61% of the shares. At the same time, GoerTek also indirectly holds 11.74% of the shares of Pico department in Qingdao through its 100% holding company Pico. Finally, Jiang Bin has a total shareholding of 35.51%.

Zhou Hongwei has publicly stated that GoerTek has mainly played the role of ODM in the process of Pico's continuous product iterations.

In the recently released 2021 interim report, GoerTek also put forward the VR segment separately, saying "compared to the same period last year, the profitability has improved due to the sales revenue growth of the company's VR and other product."

GoerTek's annual interim report shows that its VR product shipments continue to grow, intelligent hardware business revenue increased by 210.83% year on year, and the revenue accounted for 37.01% from 23.16% in the first half of last year.

It is worth mentioning that GoerTek is also one of the main foundries of Facebook's Oculus VR.

A VR industry source said, "GoerTek's identity makes Facebook quite unhappy, and Facebook once wanted to replace its role as a foundry. As a result, GoerTek has been looking for an opportunity to sell Pico."


ByteDance has made another move to layout metaverse

In April 2021, ByteDance invested around 100 million yuan into Mycodeview, the company behind Reworld, an up-and-coming competitor to metaverse incumbent Roblox.

According to public information, Reworld is developed based on Mycodeview's self-developed interactive physics engine technology system, and consists of two parts: a creation platform with high freedom and a social platform for young people with high participation, dedicated to satisfying users' gaming and entertainment experience.

In the game, players can use a variety of basic modules, or deformation or splicing to create different styles of characters, items, and scenes, and the assembled materials can obtain physical properties similar to those of the real world.

If the investment in Mycodeview is just the first step for ByteDance to enter the metaverse field, now, the acquisition of Pico means that Zhang Yiming's ambition to enter the metaverse field is speeding up.

For Pico, the intention of "spending money to buy time" is extremely obvious.

Similar to Facebook's acquisition of Oculus VR, ByteDance wants to build its metaverse with its own social, content, and globalization advantages by taking advantage of Tiktok and Lark to the next generation of terminal devices that will disrupt smartphones.

According to the report, Li Xiaokai, a former Apple senior engineer, is currently in charge of the docking matters related to the acquisition of Pico team.

With the push of the deal, ByteDance may square off with Facebook's Oculus VR division in the burgeoning field. And with Apple recently getting involved alongside a host of other established players, the competition in this track may become a hot pot soon. 

But the questions will remain about how the TikTok owner would conduct itself in the virtual reality sphere. Would users need a TikTok/Douyin account to use the headset? If the deal goes through, hopefully, time will tell.

This is an article from WeChat official accounts Lieyunwang (ID: ilieyun), written by Wang Fei.