HTC has moved its popular Vive virtual reality product line into its own company-owned subsidiary as it continues to react to its tough financial performance in the first quarter of the year.
"HTC can confirm that it has established a wholly-owned subsidiary, HTC Vive Tech Corporation, as a vehicle for developing strategic alliances to help build the global VR ecosystem," a company spokesman told eWEEK in a June 30 reply to an email inquiry.
In essence, the new subsidiary aims to support and promote the company's VR ecosystem and maximize HTC shareholder value for its investors, while isolating them from the parent company's financial woes.
HTC's earnings were hit hard in the first quarter of 2016 as the smartphone and consumer mobile device company saw its revenue fall 64 percent from the same quarter in 2015, according to an eWEEK story in May. The company posted a loss of $80 million in Q1, compared to a net profit of $11 million for the same quarter in 2015.
The company's revenue fell to $454 million (14.8 billion New Taiwanese Dollars) from about $1.27 billion (41.5 billion NTD) in 2015. Its $80 million loss compared to a net profit of $11 million (360 million NTD) for the same quarter in 2015.
The Taiwanese smartphone maker's gross operating loss for the quarter was $147 million (4.8 billion NTD), compared to a small gross profit of $627,800 in 2015 for the same quarter.
The company, however, couched the reduced revenues and the posting of a quarterly loss by pointing to the recent launch of its Vive virtual reality headset (pictured) and of its newest flagship smartphone, the HTC 10, which the company hopes will reinvigorate its sales.
"The media and consumer buzz around HTC, including for the keenly awaited launches of the flagship smartphone and Vive virtual reality system, clearly demonstrate our leadership in innovation and have provided a great boost to the HTC brand," Cher Wang, chairwoman and CEO of HTC, said in a statement at the time of the earnings announcement. "We have been working hard to lay the groundwork over the past year, streamlining processes and optimizing resources to enable us to develop the best products in the most effective way."
The company said that between the Vive and HTC 10 launches that it "anticipate[s] good momentum over the year" for improved earnings.
The Vive VR viewer has been popular and that popularity has even caused rival Oculus to quietly remove software controls that prevented users of Vive VR headsets from using and playing games that were developed originally for Oculus Rift VR headsets. Oculus had previously developed software locks to block users of the competing HTC Vive VR headset from using game titles that were developed for the Rift, but faced criticism for its actions, according to a recent eWEEK story. The locks were used by Oculus after disappointed Vive fans apparently created a software platform called "Revive," which allowed them to port Rift games so they could be played on the Vive.
The removal of the software locks was discovered by a Revive developer, LibreVR, who noted its demise in a June 24 post on the Revive Githib development page. The locks were a Digital Rights Management (DRM) tool to block the use of the games by non-Rift devices. The game software was modified to identify which VR device the software was being run on before allowing a game to be played.
VR is gathering steam with consumers as more companies release VR products, games and content.
A new report issued by research firm TrendForce concludes that Sony's upcoming PlayStation VR headset, which won't even be released until October, is already priming the global virtual-reality marketplace, according to a recent eWEEK story. Big preorder numbers for the PlayStation VR point to the device making up some 67 percent of the expected 9 million VR devices that will be sold in 2016, the research concluded. Sales of the PlayStation VR headset are expected to "overwhelm its competitors this year, taking 67 percent of the global VR device market with about 6 million units shipped," while competitor Oculus will ship about 2.3 million units of Rift and HTC will ship only about 700,000 units of its Vive headsets, according to the report. The report also projects sales of some 50 million VR devices globally by 2020, for a compound annual growth rate of 53.5 percent.
TrendForce also estimates that total sales in the VR market globally will be more than $70 billion in 2020, with software making up about 60 percent of that total.