Meta has reached a tentative agreement with Tencent to sell a new low-cost virtual reality headset in China, the Wall Street Journal reported, giving the more than a decade-old tech giant access to Chinese consumers for the first time.
The American company is trying to return to a country where Facebook and Instagram are still banned. A tentative agreement makes Tencent the exclusive manufacturer and seller of the new Meta headsets in China, where the Chinese video game maker will begin selling them with the glasses. End of 2024.
In mid-2009, Beijing banned Facebook and Twitter, following bloody unrest in the western region of Xinjiang, which authorities said were provoked by social media sites. Beijing has also blocked WhatsApp and Instagram.
The VR deal gives Meta a chance to return to the Chinese market and compete with ByteDance, owner of the TikTok platform and maker of the Pico VR headset.
The deal with Tencent represents an important new market for the American giant as it seeks to boost global demand for its devices.
The Quest headset is currently selling very well in the emerging virtual reality space. Earlier this year, the company launched Quest 3, a new generation of mixed reality glasses.
Meta plans to use lenses other than the Quest 3 in its low-cost headsets for China and possibly sell the glasses in other markets as well.
Meta accounts for the majority of revenue from hardware sales, while Tencent generates more revenue from content and services while providing low-cost headsets for games and other applications published by the Chinese company.
The deal currently faces regulatory hurdles in China, which has tightened rules around video games and other digital content in recent years.