Meta Platforms Inc (NASDAQ:FB) has agreed a deal with Tencent Holdings (HKG:0700, OTC:TCEHY) to introduce a new, budget-friendly virtual reality (VR) headset in China, according to the Wall Street Journal.
This move marks Meta's strategic effort to re-enter the Chinese market, where its major platforms, Facebook and Instagram, have been inaccessible since mid-2009 due to a government block following unrest in Xinjiang, the paper said.
Under this preliminary deal, Tencent will become the exclusive distributor of Meta's VR headsets in China, with sales expected to commence in late 2024. The specifics regarding the headset's pricing were not disclosed in the report, the WSJ report added.
The partnership reportedly offers Meta a renewed opportunity to establish its presence in China's market, positioning it to compete with Bytedance, the owner of TikTok and the VR headset brand Pico.
Meta's Quest series has gained popularity in the VR sector, with the company having recently unveiled the Quest 3, a next-generation mixed-reality headset.
For the Chinese market, Meta is planning to use less expensive lenses in the new headset compared to those in the Quest 3, making it more affordable. This version will also be available in other markets, the WSJ said.
The agreement stipulates that Meta will earn a larger portion of the hardware sales, while Tencent will primarily benefit from content and service revenue. The headset is expected to feature games and applications published by Tencent, aligning with the company's content strategy, the American business daily said.