Tencent Pulls Back from VR Hardware Development in Light of Fluctuating XR Market

The Chinese tech giant Tencent The tech giant has abandoned its plans for VR hardware owing to grim economic forecasts, resulting in significant budgeting adjustments and the downsizing of its metaverse unit, as reported by Reuters. reported .

Last June, Tencent launched an extended reality (XR) division aimed at developing virtual reality software and hardware, hiring nearly 300 team members in the process. As the foremost video game publisher, Tencent harbored considerable aspirations for this XR initiative.

Sources shared with Reuters that the company had envisioned a handheld game controller designed in the shape of a ring. However, due to challenges in ensuring quick profitability and the hefty investment needed for a high-quality product, Tencent chose to scrap that concept.

According to one insider, the internal projections for the XR venture indicated it wouldn’t become profitable until at least 2027. Meanwhile, a second source highlighted the unit's struggle to launch appealing games and applications.

In reference to the XR unit's fate, the company mentioned in a statement to Reuters that they are restructuring certain business teams in response to changes in their hardware development strategies. Nonetheless, Tencent reassured that the XR team won’t be completely disbanded. After Reuters’ report, Tencent’s stock witnessed a 2.5% dip.

ByteDance, the parent company of TikTok, has control over Pico, a VR headset manufacturing company. Recently, they began reducing their workforce significantly in light of concerning financial forecasts. Earlier this week, Pico confirmed they had let go of a select number of employees, with reports suggesting around 200 staff members were impacted. Reuters The XR market has experienced significant instability lately, with firms like Microsoft disbanding its Industrial Metaverse team and executing layoffs affecting 100 employees. Additionally, Crayta, a metaverse gaming platform akin to Roblox which is owned by Meta, has also faced similar challenges.

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