In a bit of corporate reshuffling today, HTC has decided to spin off their Vive VR headset business into a separate, wholly-owned company under HTC. No changes in ownership and, more than likely, no changes in strategy are necessarily in order, but the move sheds a little light on the financial situation at HTC and the risk involved in VR.
The Verge is reporting today that HTC has confirmed that the new company, called HTC Vive Tech Corporation, will be a wholly-owned subsidiary of HTC. It’s hard to say why, exactly, because there are reasons going in both directions. We know HTC’s core smartphone business is struggling, both from razor-thin margins and slowing sales of their flagship Android smartphones, to the point where its viability in even the near-term has been called into question. With VR in its infancy, HTC desperately needs third-party support from the outset in order to sell Vive units (which will be very difficult, anyway), and those third parties might be skittish about investing in a platform that could go up in smoke because of HTC’s financial situation.
Then again, that might be an overstatement. The HTC Vive has an open source API, so if developers are building VR games anyway, it’s not that difficult to make those games work with the Vive. Software might not be the driving force behind this decision — it could be peripherals. While home VR is certainly an interesting market, chances are good that, with how expensive VR is, VR arcades could become a more viable business opportunity. Those arcades could make use of high-end peripherals like steering wheels, flight joysticks, and guns, and HTC would no doubt like to secure some exclusive deals in that space. Being able to sell Vive units in bulk to proprietors would rely on both peripheral support and financial health, and by spinning off the Vive unit, HTC can ensure that if their smartphone business goes under, the Vive business will be unaffected.
But, there’s a current running in the opposite direction. For all of its promise, the market hasn’t yet deemed VR to be a success. VR could be the future of entertainment, or it could go the way of 3D TVs — and there are plenty of good reasons why mass market adoption of VR might not happen, starting with (but not limited to) the extremely high cost. The HTC 10 made it clear that HTC is by no means done in the premium smartphone space, and it’s seems just as likely that they would like to insulate that smartphone business from the possibility of VR being a flop.
Spinning off the Vive seems like a smart bit of hedging for a company facing a lot of challenges in both of the markets it’s committed to. Thing is, when you hedge, one of your bets has to pay off. Here’s hoping one does for HTC, or they’re going to be in a lot of trouble.
Via The Verge