China VR Store White Paper 2016 – Part 1

I’m Victor, the admin and writer of VR-in-China.com. My day job is a market analyst and I have been watching the VR market in China for more than 8 months now.

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Among all the sectors of VR market, I mostly believe in the VR experience store sector in China. It’s a business model that I think will be very big and driven by China because of the dense of population there.

So the 1st article of VR-in-China.com in 2017 will be some facts about the VR experience store market in China. (The stats following are collected from China VR Store White Paper 2016)

China VR Store Alliance

Last Dec., one of the famous VR news publication Heix held a big gathering in GuangZhou, China, for the VR experience store owners across China. A China VR Store Alliance was formed on that meeting. It was reported that more than 300 store owners attended the meeting. At the meeting, this China VR Experience Store White Paper was also released.

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With the support from store owners and China VR Experience Store Alliance members, Heix collected abundant materials through questionnaires, partitioned small-scale group interviews and directional one-on-one interview. By the end of November, Heix has screened out 3000 valid store sample and generated the White Paper based on them.

1st part of this article will be focusing on the Store Owners and Store.

Part I Store Owners

The managers with decision-making powers in offline experience market are generally grouped as “Store Owners” in the report. They are the true torchbearers and blazers of the consumer market at the current stage.

  • 26-35 years old: 62%
  • Male:Female ratio 8:2
  • Operator Background 47%
  • Tech Background 34%
  • Manufacturer Background 10%

The majority  of the store owners are between 26-35 years old, around 62%. The male to female ratio is 8:2 and the market favors male owners at the initial stage. Most store owners are people with working experience but seeking transition and breakthroughs. In terms of background, operations background is the mainstream, over 50% of store owners has run Internet cafes, KTVs, game arcades or real estates. Technology background takes second place, these owners have software development, architectural design experience. Electronic machinery and assembly related manufacture background is relatively rare. But noteworthily, some of the store owners(5%) also have public functionary, public institutions and state-owned enterprises working experience.

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Social networks often exaggerate our expression of feelings. Back to the rational realm, around 60% people felt optimistic about the future of offline experience market, while the other 30% are observers and only 10% are pessimists.

  • Optimistic 60%
  • Observers 30%
  • Pessimist 10%

In the optimists’ point of view: the technology revolution will surly result in a major change. As VR/AR is within trend, it is just a matter of time when they become mainstream. And it is better to join the changing process as early as possible so that they can adjust in time, have more debug opportunities and have a better chance to stand out.

The observers are concerned about the industry chain status quo and worried that the whole offline experience market will be short-lived, the whole market will quickly switch to the consumer side.

The pessimists mainly are facing the chain reaction of operating pressure. For example, they have invested too much or expanded too fast in size or quantities, which resulted in a deteriorating balance sheets.

Less than one third of the store owners have made a profit in 2016, and those who profit only via VR experience stores are a rarity of the rarities. Most stores are trying to include value-added service like catering to hedge the risks.

– Profit in 2016: 26%

– Have Faith to be Profitable in 2017: 54%

2016 is a special year. Firstly, HTC Vive was launched in the second quarter, the store owners have a more multi-functional tool; secondly, numerous retail investors joined the game and the whole industry is at a tasting stage, everybody has their own understanding and methods.

As for next year, the majority are optimistic and 54% owners think they can make a profit.

Part II Stores

The VR experience store in China are mostly opened by small business people, so it’s difficult to say how many stores are there in China now. Different company use different figures, mostly the figure used is 3000-5000.

Currently, the most important factor in opening a store is the location. 70% of the store owners choose a traffic central point. It is mainly because VR as a novelty can bring unprecedented experience to new comers and convinced them into consumers in a pretty long period of time.

vrstorelocation

Also, the current public opinion environment is spreading “VR” this key word as well. But noteworthily, every big cities have limited traffic central points and it need power and resources to get a store.

storesize

In terms of the store size, 28% of the stores are under 50 square meters, 31% are between 50 to 100 square meters and 24% are between 100 to 300 square meters. This year the motion chair kind of VR hardware (so called’egg chair’) has upgraded, not only in appearance and content, but also in floor space. Apart from that, HTC Vive has requirements on walking space as well. Therefore several Vive equipments will have much more demand on the store size than last year’s egg chairs.

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Currently most of the VR experience stores are in first tier cities, and then expand to surrounding cities, which means there is a time difference in VR experience level and thus offers a release channel for equipment circulation.

For areas around Guangzhou and Shenzhen, the number of experience stores has been soaring due to the concentration of factories.

The promotion of experience stores is mainly online, utilizing social media like WeChat and stores platform like dianping.com (Chinese version of Yelp). The traditional media in cities, especially video stations, still have notable influence.

[to be continued]

[The 2nd part of this article will be posted this week]

Author: vrinchinaadmin

admin of VR-in-China.com

One thought on “China VR Store White Paper 2016 – Part 1”

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