HTC Hopes to Challenge Sony, Facebook in Virtual Reality Space

Phone Maker Teams Up With Steam Game-Distribution Service

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Credit: Kiyoshi Ota/Bloomberg

HTC Corp. is working with Valve Corp. to challenge Sony Corp. and Facebook Inc.'s Oculus as an early player in the virtual-reality market.

HTC Vive -- a set of VR goggles to pair with a controller and sensor towers -- uses game developer Valve's Steam VR tracking technology to let users walk around and explore simulated environments. Vive will run content from Valve, as well as Google, Lions Gate Entertainment Corp. and Time Warner's HBO and will be available to consumers this year, the Taoyuan, Taiwan-based smartphone maker said.

HTC has in recent months unveiled its periscope-shaped RE action camera and developed a smart wristband with Under Armour as it looks beyond smartphones to reverse three years of annual sales declines. The phone maker is the latest to enter the nascent VR market, after Sony's Project Morpheus headset and Facebook's purchase of Oculus VR last year.

"Virtual reality will become a mainstream experience for general consumers," HTC President Peter Chou said yesterday at the product announcement in Barcelona.

HTC, which was once the No. 1 smartphone vendor in the U.S., has seen sales and its share price plummet amid cheaper phones from Xiaomi Corp. and aggressive marketing by Samsung Electronics Co.

Steam -- the distribution platform developed by Valve that allows users to download and stream games such as the "Grand Theft Auto" and "Call of Duty" franchises -- had more than 100 million active accounts as of September. Valve is also known for developing the games "Half-Life," "Portal" and "Left 4 Dead."

The Bellevue, Wash.-based company in 2013 unveiled plans for its Steam Machine home gaming system, which runs its Linux-based Steam operating system. Last week, Valve said it would give demonstrations of a "previously unannounced SteamVR hardware system" at the Game Developers Conference in San Francisco that also kicks off today.

"Right now the real weakness of VR is the lack of content," said Lewis Ward, director of gaming research at IDC Corp. "All VR apps have to be written from scratch, more or less, because the hardware is so different from anything that has come before it."

Besides gaming, HTC expects its VR system will be usable for immersive training as well as virtual tours of homes and travel spots, HTC Chief Financial Officer Chang Chialin said in an interview in Taipei last month. The company has around 100 people in its core virtual-reality team working on developing hardware that will connect with users' own computers, he said.

"We hope this is one of the strong growth engines going forward in the coming years," said Mr. Chang, who is also head of global sales. "It's not just for personal entertainment, in our strategy we can apply the platform to multiple vertical fields."

Vive will be available in a developer edition this spring before the consumer edition is released by the fourth quarter, HTC said.

Also announced yesterday was the M9, the latest in HTC's One series of metal-cased smartphones, which features a 20 megapixel rear camera that can shoot 4k resolution video. The HTC Grip, a smart wristband developed with Under Armour, keeps time, tracks exercise and connects to smartphones operating on Apple's iOS or Google's Android.

Facebook last year bought Menlo Park, California-based Oculus for around $2 billion as the social-networking company invests in new technologies. Founder Mark Zuckerberg said at the time that he expects to make money from the purchase through advertising, software and services.

Sony, the world's largest maker of game consoles, last year began demonstrating games for its Project Morpheus hardware as part of Chief Executive Officer Kazuo Hirai's plan to expand the user base for the company's PlayStation game consoles. Morpheus works with the PlayStation 4 while Oculus's Rift requires a high-powered PC.

In December, Samsung began selling its Gear headset, into which its smartphones are inserted to provide 3-D visuals. Google Inc.'s Cardboard uses templates to turn phones into low-cost VR goggles.

--Bloomberg News

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