A massive metaverse move by Tencent

After Facebook changed its company name to Meta Platforms last fall, the “metaverse” became a buzzword. It remains determined about how the metaverse will ultimately look and function, but it seems likely that virtual worlds will expand in the future. Apparently, Oculus became the most downloaded app on Christmas Day, which indicates that people are exploring this whole metaverse idea. Clearly, Tencent is in the best position in China to profit from the metaverse.

Tencent’s WeChat “super-app” is used by over 1.26 billion people in China, and Meta dominates global social media with its Facebook and Instagram platforms. Moreover, Tencent is ahead of Meta in mobile gaming, another key application of the metaverse.

Tencent is China’s largest game publisher, as well as a major investor in many of the biggest gaming studios worldwide. Tencent, however, lacks a virtual reality headset platform, as Meta does with its Oculus platform, whereas Meta has it.

Black Shark is being bought by Tencent

According to 36Kr, the Chinese media outlet Tencent is acquiring Black Shark. Xiaomi funded Black Shark in 2017 and the company makes gaming-oriented smartphones and accessories. After Tencent purchased Black Shark, it said to change its business model to invest in AR/VR headsets. Tencent has agreed to pay an amount between RMB2.6 billion and 2.7 billion ($410 million to $425 million). Compared to Oculus’s 2014 acquisition price of $2 billion, this is a far cry from the $2 billion paid back then. However, Black Shark has yet to produce a headset, which will require additional funding. Then why did Tencent choose Black Shark, which has only manufactured phones to date and doesn’t manufacture headsets?

36kr reported that Black Shark is no longer essential for Xiaomi. Despite the development of enhanced gaming features for Mi and Redmi, a relatively small number of Chinese citizens purchase specialized gaming phones. However, Black Shark has also developed expertise adapting games for mobile devices, particularly for Qualcomm chips. In virtual reality and metaverse applications, Qualcomm’s modems will remain vital, as they were in mobile phones. Qualcomm’s experience in mobile phones could prove invaluable to the metaverse.

Black Shark might just be what Tencent needs

In terms of its VR technology, Black Shark isn’t as advanced as Oculus was, but Tencent might be able to get into the field with this acquisition. Due to its position as an industry leader and one of the largest video game distributors in China. Tencent already has a great deal of expertise in both software and platforms. Epic Games and Roblox, to name a couple, operate the Unreal engine and Roblox Studio engines, respectively.

It is easy to see how Tencent would be the most qualified company to tackle the metaverse since it has expertise in gaming, social networking, cloud infrastructure, artificial intelligence, streaming videos, and digital payments. Tencent really hasn’t ventured into the hardware side to date, so that’s the only piece that’s missing. The majority of Tencent’s current products are software internet platforms with high margins and low capital expenditures, except for a few proprietary semiconductor designs for internal use. However, the technological demands of the metaverse may be greater, which means companies must optimize software with proprietary hardware solutions.

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