(Reuters) – Meta Platforms (NASDAQ:) struck a deal with Tencent Holdings (OTC:) to sell a new, low-cost virtual-reality (VR) headset in China in a return to a market where Facebook and Instagram are blocked, the Wall Street Journal reported on Thursday.
The preliminary deal will make Tencent the exclusive seller of the headset in China and the videogame maker will start its sale in late 2024, the Journal said, citing soucres.
It also gives Meta a chance to return to China after 14 years and compete with TikTok-owner Bytedance, which makes the VR headset Pico.
The report did not mention the potential price of the new headset. Meta and Tencent did not respond to Reuters requests for comment.
Meta sells Quest 2 headset in the United States at a starting price of $300 and Quest Pro headsets at $1,000. It had earlier this year unveiled Quest 3, starting at $500.
Facebook and Twitter were blocked by Beijing in mid-2009 following deadly riots in the western province of Xinjiang that authorities said were abetted by the social networking sites.
The deal comes amid strained relations between China and the United States after the Biden administration imposed export curbs on certain high-end technology, particularly some chips, in a bid to thwart its use by the Chinese military.
For China, Meta is planning to use lenses in the headset that are cheaper than those in the Quest 3, according to Journal report. This version will also be sold in other markets.
Meta would take a bigger share of device sales, while Tencent would get more of the content and service revenue, with the cheaper headset providing games and other apps published by the Chinese company.
The China push comes as Meta faces threat from Apple (NASDAQ:)’s new mixed-reality headset Vision Pro, which would go on sale early next year.
The headset is priced more than three times Meta’s most expensive Quest headset and is aimed at enthusiasts. Currently, Quest is the bestseller in the nascent VR space, according to research firm IDC.
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