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China tech

Hong Kong-listed game developer jazzes up offerings with VR startup

With 150m yuan acquisition, Forgame gets both game tech and a chain of arcades

Xigua develops large-space VR technology and operates nearly 100 "Player No. 1" VR arcades across China. (Courtesy of Forgame Holdings)

BEIJING -- Forgame Holdings, a Hong Kong-listed Chinese online and mobile game developer, has acquired virtual reality startup Beijing Xigua Huyu Entertainment Technology in a bid to jazz up and expand its product line.

Forgame bought a 69.84% stake in Xigua, which was founded in 2015, for 150 million yuan ($21.8 million).

Xigua develops large-space VR technology and operates nearly 100 "Player No. 1" VR arcades across China.

These VR entertainment centers typically have floor space of 150 to 200 sq. meters and are located in shopping and entertainment districts in large cities like Beijing, Shanghai, Hangzhou and Chongqing as well as small towns.

Most of these facilities are managed directly by the company and many are located in shopping malls. A few are roadside outlets or housed in conventional game arcades.

Xigua plans to expand its VR arcade network quickly by increasing the number of outlets to over 350 by the end of 2019.

Forgame, a Chinese game developer founded in 2009, mainly offers relatively simple, easy-to-play web games.

The company made its stock market debut on the Hong Kong Stock Exchange in 2013. The company's shares rose marginally after it announced the acquisition. With profit margins on browser games shrinking, investors saw Forgame's purchase of a VR player as a good strategic gambit to upgrade and supplement its game business.

Wang Dongfeng, chairman, CEO and co-founder of Forgame, said the acquisition was prompted by his company's expectations for the VR market concerning the next decade.

In the game industry, Wang observed, a new era, marked by a big new technological trend, arrives once every decade. In each era, there is at least one major business opportunity, he said. VR will be the defining technology and crucial source of business opportunities for the game and content industries in the dawning new era, he said. 

There are no large pools of VR technology or hardware yet in China and the country's VR market is still underdeveloped, Wang pointed out. "This is why a VR company with extensive capabilities in hardware development, distribution and content development, as well as a viable business model, is very valuable to us," he said, explaining the reasons for his high opinion of Xigua and his decision to get involved in the management of "Player No. 1" VR arcades.

Infinite Multi-Target Positioning System (IMPS) technology developed by Xigua allows users to locate multiple targets in large VR spaces.

IMPS-driven large-space VR games are not constrained by data transmission cables or space barriers and designed to provide players with a greater degree of immersion and interactivity.

With Wi-Fi used for data transmissions between the VR device and a wearable backpack PC to do the video processing, the system supports 6-degrees-of-freedom (6DoF) motion tracking and accurate, simultaneous positioning of 10 targets. 6DoF basically means the VR headset tracks not just the player's head movement but also the player's location as he or she physically moves in various directions. This allows game battles among multiple individual players or groups of players in a 400-sq-meter VR space for a fifth to a one-tenth the cost of VR headsets offered by major foreign manufacturers. Products based on IMPS technology for simultaneous, multiple positioning in a large space are powering the rapid expansion of the "Player No.1" VR arcade network.

Most of the VR games that have been developed for "Player No. 1" are basically designed for male gamers. The company plans to release 10 new titles soon and further expand its product portfolio by teaming up with online game developers and creating casual experience-oriented games and titles targeting female players. The company is hoping that these efforts will also help make VR experiences more accessible to a wider range of consumers and thereby boost the efficiency and sales of its VR entertainment business.

Since most customers of "Player No.1" outlets are aged 20-35, the company will seek new revenue sources in addition to admission fees by selling VR devices and content targeted at this age group at its arcades.

Wang also referred to a plan to transform "Player No.1" arcades for large-space VR experiences into a chain of a new breed of movie theaters that offer next-generation entertainment and content products as well as VR gaming experiences.

36Kr, a Chinese tech news portal founded in Beijing in 2010, has more than 150 million readers worldwide. Nikkei announced a partnership with 36Kr on May 22, 2019.

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