1. Scenario Planning
Based on the information you provided, here’s a detailed analysis following the four-step scenario planning process:
(1) Identify Key Strategic Issue
Key Strategic Issue: The company needs to decide which direction to focus on among three potential areas—Virtual Reality Content, Hardware Manufacturing, and Business Model—given the constraints on resources and the existing technology barriers.
Technology Barriers: With deep expertise in mixed reality technologies, the company needs to choose the best direction to leverage these technologies effectively. The options are:
- XR Runtime Rendering module.
- SLAM localization module.
- Large space scan and reconstruction.
- External equipment to enhance user experiences.
(2) Identify Key Trends and Uncertainties
Trends:
- Large Space VR Market Growth: Rapid expansion in the large space VR market with increasing revenue and more companies entering the field.
- Growing VR User Base: Increasing availability and adoption of VR devices among consumers.
- Rising Reputation of Video Games: Video games are gaining recognition for their cultural impact and ability to engage users, leading to potential market opportunities.
Uncertainties:
- Consumer Preferences in Large Space VR: Uncertainty about what features consumers value most in large space VR applications—content, story, visual effects, gaming, etc.
- Market Saturation: Potential over-saturation of the market with too many competitors, which might limit the company’s ability to capture market share.
(3) Construct Scenarios
To construct scenarios, we’ll use the two most critical uncertainties: Consumer Preferences and Market Saturation. Here’s how they might be plotted:
| Market Saturation: High Many Competitors |
Market Saturation: Low Few Competitors |
|
|---|---|---|
| Consumer Preferences: Content-Focused | Scenario A: Content-Rich VR Dominates | Scenario B: Niche Content for Targeted Users |
| Consumer Preferences: Technology-Focused | Scenario C: Tech Innovation Drives Differentiation | Scenario D: Technology Alone Isn’t Enough |
(4) Write Your Scenarios
Scenario A: Content-Rich VR Dominates
- Description: In a highly saturated market where many competitors are present, consumers strongly prefer content-rich experiences in large space VR. The market is competitive, and success depends on creating unique and engaging content that stands out. Investing in developing high-quality VR content will be crucial.
- Implications: The company should focus on developing compelling VR content and storytelling. Leveraging existing expertise in XR Runtime Rendering and large space scan and reconstruction might be advantageous in creating immersive experiences.
Scenario B: Niche Content for Targeted Users
- Description: Despite high market saturation, there is a niche segment of users who value specialized content. The company can carve out a unique position by targeting this niche with tailored content offerings. The market is crowded, but specific, well-defined content areas allow for differentiation.
- Implications: The company should invest in niche content development and explore unique use cases. Consider focusing on targeted content areas and potentially using SLAM localization to enhance the specificity of experiences.
Scenario C: Tech Innovation Drives Differentiation
- Description: In a market with many competitors, consumers are more focused on technological innovation and features rather than just content. The company’s technological advancements, such as XR Runtime Rendering or external equipment enhancements, become key differentiators.
- Implications: The company should prioritize technological innovation and invest in R&D for advanced XR Runtime Rendering modules and external equipment. Differentiating through superior technology can help capture market share even in a crowded market.
Scenario D: Technology Alone Isn’t Enough
- Description: With few competitors in the market, the primary driver of success is not just technology but a combination of innovative technology and engaging content. Consumers are interested in a balance of advanced technology and compelling experiences.
- Implications: The company should strike a balance between technological development and content creation. Investments should be made in both hardware (e.g., SLAM localization) and content to ensure a holistic and appealing offering.
2. Payoff Matrices
In 2024, the large space VR market is experiencing significant growth, with several key competitors and distinct strategies shaping the landscape:
Market Strategies:
- Technology Innovation: Companies are investing heavily in R&D to improve hardware performance, including resolution, frame rates, and interaction capabilities. This is crucial for enhancing user experience and attracting new customers.
- Content Ecosystem Development: Collaborations with content creators are essential for building a diverse range of VR experiences. This includes games, educational content, and immersive storytelling.
- Commercial Model Innovation: Many companies are exploring new business models, such as subscription services and pay-per-experience formats, to increase revenue streams and user engagement.
Payoff Matrix:
| Meta Focuses on Content Ecosystem | Meta Focuses on Market Expansion | |
|---|---|---|
| Pico Focuses on Hardware Innovation | Scenario 1: Pico maintains lead in hardware; Meta’s content becomes a major differentiator. Potential moderate payoffs for both, with consumers choosing either high-end hardware (Pico) or rich content (Meta). (Moderate Payoff for both) | Scenario 2: Pico leads in hardware but Meta expands faster, capturing new markets and users. Meta wins new users and Pico risks losing market share. (High Payoff for Meta, Low for Pico) |
| Pico Expands Content Ecosystem | Scenario 3: Both companies invest in content, creating intense competition. This may increase overall market demand but lead to a price war or diluted differentiation. (Moderate Payoff for both) | Scenario 4: Meta’s focus on market expansion and Pico’s content focus could lead to Meta gaining new users while Pico retains core, loyal users. (High Payoff for Meta, Moderate for Pico) |
3. Acquisition Analysis
Not suitable for our firm.
4. Real Options Analysis
Decision Tree :
- Is there rich technological opportunity in the market? Yes.
- Does our firm have an innovation capability? Yes.
- Is the IP regime tight?
- No. Most algorithms are open sourced.
- Yes for innovation. And technologies are still in advancing.
- Does we have the right complementary assets ?
- No, we have no VR device assets.
- Yes, we have the unique vehicles’ pose estimation device set.
- Are complementary assets widely available?
- Yes, for VR devices.
- No, for vehicles’ pose estimation device set.
As a result, we are in such position : IP Protection Weak, Complementary Assets tightly hold.
- We should develop to be “Holders of Complementary Assets”.
- Our strategy should be to “Integrate”. We could form alliance with VR content creators and VR device providers.
- We should also focus on creating barrier for our vehicles' pose estimation device set.