Alibaba to test gaming potential of metaverse as Big Tech firms stampede into virtual world

  • The new unit, wholly owned by Alibaba’s investment arm, has listed its major business as software development and services
  • Yuanjing Shengsheng’s creation comes just two months after Alibaba’s cloud gaming business unit launched a new brand with a similar name

Alibaba Group Holding has registered a new company in Beijing named Yuanjing Shengsheng to test the gaming potential of the metaverse, in the latest sign that China’s Big Tech firms are doubling down on what many see as the future of the internet.

The new unit, wholly owned by Alibaba’s investment arm, has listed its major business as software development and services, according to public registry tracking firm Tianyancha. It has 10 million yuan (US$1.6 million) in registered capital. The unit’s business is related to the metaverse, according to a report by Chinese media outlet, citing unnamed Alibaba employees.

The establishment of the new unit underlines Alibaba’s interest in the metaverse, a shared, immersive 3D virtual space where people can interact and trade, and the move comes despite Beijing’s tighter scrutiny of the gaming sector in the past year. It also comes hot on the heels of similar forays into the metaverse by other Chinese tech giants, including Tencent Holdings, NetEase and Baidu.

“This move reflects Alibaba’s strategy for the metaverse,” said Chenyu Cui, a senior games research analyst at London consultancy Omdia. “[It’s] an effort to leverage its edge and cloud computing technology to establish the essential infrastructure for the metaverse.”

Yuanjing Shengsheng’s creation comes just two months after Alibaba’s cloud gaming business group launched a new brand with a similar name, describing it as a platform for cloud gaming. Alibaba said at the time that the platform would offer free computing sources for small to medium-sized cloud gaming developers.

Cui said Alibaba is choosing technology to enter the segment, which may allow the e-commerce giant to step into games and the virtual reality space later once the metaverse concept becomes more mature.

The race towards the metaverse has gathered pace in China in recent months, even as regulatory concerns remain in the background.

Chinese search engine Baidu announced last week that it is launching its first metaverse product this month, called the Land of Hope, a virtual 3D space which will serve as the online interaction hub for Baidu’s own artificial intelligence (AI) developers’ conference later this year.

It will be the first Chinese conference to be held in a metaverse space, the tech firm said. It also boasted that its platform would be able to handle 100,000 participants interacting at the same time.

Other Big Tech companies including Alibaba, Tencent, and NetEase have all applied for trademarks related to the metaverse to pave the way for future plans around the red-hot concept.

Hong Kong and New York-listed Alibaba has submitted applications to trademark the Chinese terms for “Ali Metaverse”, “Taobao Metaverse” and “DingDing Metaverse”, according to business research firm Qichacha. Taobao is the name of Alibaba’s flagship online marketplace, while DingTalk is the company’s chat app.

Tencent, owner of multipurpose super app WeChat and operator of the world’s largest video gaming business by revenue, filed in September to register nearly 100 metaverse-related trademarks, including “QQ Metaverse”, “QQ Music Metaverse” and “Kings Metaverse” – corresponding to the names of the company’s messaging app, music-streaming platform and marquee mobile game Honour of Kings, respectively.

Online video platforms Kuaishou and iQiyi, as well as electric carmaker Li Auto, have also sought to register their own metaverse trademarks.

The metaverse – a term coined by American writer Neal Stephenson for his 1992 science-fiction novel Snow Crash – refers to a lifelike, immersive virtual world where people can meet, work and play using devices including virtual reality (VR) headsets, video gaming consoles, and gadgets that offer augmented reality technology like smartphones and smart glasses.

Alibaba’s investments and announcements in the metaverse up to now have focused on the infrastructure side, leveraging its cloud expertise and data analytics on its cloud to provide tools for others to build metaverse experiences, according to Matthew Kanterman, senior analyst at Bloomberg Intelligence.

“These new companies could help it create its own consumer-facing layer and focus on key areas such as the burgeoning ‘direct-to-avatar’ economy that [could] take off and revolutionise its core e-commerce business, but it’s far too premature to speculate on that,” said Kanterman.

Authors: Jane Zhang, Josh Ye, SCMP

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