Other metaverse-related companies have pivoted in anticipation of investment from the government. For Eric Liu, cofounder and CTO of Shanghai-based digital twin company Digitwin Technologies, the 14th Five Year Plan has helped underpin his company’s shift to focus on energy and manufacturing—“a field that previously wasn’t ready” for this kind of tech, he says.
While the Chinese government’s desire to shape the metaverse may limit its scope, state support may mean it doesn’t fall victim to the notoriously fickle tech sector, which moves on from trends at great speed. Startups often try to be “in the middle of a whirlwind,” meaning the right trend with an explosive growth potential.
“If anything gets buzzy in China, you see companies swarm into the space,” says Jingshu Chen, cofounder of VR company VeeR. “However, if growth isn’t as fast as their expectation, more companies are also likely to pivot.”
The Chinese VR industry has been through an accelerated boom-and-bust cycle and is in the middle of another period of rapid growth. There were 3,177 registered VR companies in China in 2016, according to business intelligence platform Qichacha. However, people in the industry say only a handful of those companies survived. In 2021, the arrival of Meta’s Oculus Quest 2 and TikTok parent company Bytedance’s acquisition of Pico, a Chinese VR firm, gave the sector a new impetus. Bytedance’s bet on Pico, which launched its rival to Meta’s Oculus range in 2022, was widely seen as an attempt to muscle in on the metaverse business.
But, just as in the US, some of the shine has come off the idea of the metaverse, as disparate products don’t quite come together to create the rich virtual worlds that tech companies promised, and as startups struggle to turn big ideas into profitable businesses. “Every metaverse company is trying to find a product-market fit,” Liu says.
High-profile, consumer-focused metaverse projects already seem to have quietly disappeared. Last June, hospitality group S&N Hotels Group launched “China’s first hotel in the metaverse” on the platform Fracteller Metaverse, which no longer seems to be online. Last October, Zhangjiajie—a scenic national forest park that reportedly inspired James Cameron’s movie Avatar—debuted the “world’s first tourism metaverse platform,” Zhangjiajie Planet, on messaging app WeChat’s Mini Program. But the platform’s features are limited, and when WIRED tried to “name a virtual mountain”—one of its main selling points—the platform asked us to reach out to its WeChat account or call a landline number instead.
Liu says he has found that a number of clients are paying for metaverse services only “for show” rather than because they thought they had real utility. “When it comes to innovation in China, a lot of the projects that get approved and then done are not necessarily operational projects,” he says. “It was almost showing off to their leaders that this was done, this budget was spent, otherwise it gets taken away. But after the stakeholders are convinced, they don’t really use it anymore.”
The buzz in the private sector has moved on to generative AI. Several China-focused tech investors say they have turned their attention away from the metaverse. But the government’s vision hasn’t changed.
“The government is rather focused on the long-term with policymaking,” VeeR’s Chen says. “The recent AI hype hasn’t affected how different levels of government continue to follow through their metaverse policies.”
