From Forbes’ Lisa Hanson: 2016 became “year one” of virtual reality in China, due to the fact that the sector finally truly started to grow. My company Niko Partners estimates China’s VR hardware 2016 market size will hit $300 million by the end of this month with mobile VR being the unequivocal leader in terms of hardware unit sales. Virtual reality overall has been embraced in China more than the West and Chinese consumers have shown a willingness to go out and purchase VR devices or experiences, whereas consumer interest in the West has been somewhat muted.

Consumer demand is driven by what is available to purchase however, and in China one can engage in “experience spots” such as VR pods or VR cafés, whereas consumers in the United States do not have that as an option quite yet. A survey done by Niko Partners earlier this year showed that more than half of Chinese gamers are interested in VR and almost 30% are willing to spend up to $200 USD on a device, which is significant considering the average income in China hovers around $12,000 per year.

In early 2016 Niko Partners counted 200 VR and augmented reality (AR) startups, and nearly 200 established companies expanding into VR/AR, in China alone, with more companies emerging monthly. Hardware investments accounted for 78% of the total investments made in all VR related products in 2015 and 2016. That investment has led to a surge in VR hardware sales this year whilst software sales growth hasn’t been as high. Development and sales of VR software has been slow, but should take off in the coming two years.

Mobile VR hardware has proved to be considerably more popular than high-end PC/Console VR hardware due to a number of factors. Mobile platform companies, such as Xiaomi & Huawei, and startups like Pico VR, Baofeng Mojing and Deepoon, have made mobile VR hardware readily available across both offline and online retail stores. The price of mobile headsets is affordable. T-Mall reported that the overwhelming majority of the 300,000 mobile VR headsets sold during the 11.11 shopping holiday cost less than 30 yuan, similar pricing to that of Google Cardboard in the West. These mobile VR headsets are easy to use and work with many existing smartphones, which is appealing when compared to expensive high-end VR hardware.

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