One of China’s biggest companies is shrinking the metaverse unit As part of a new direction.
Tencent Reportedly partially disbanding the Extended Reality (XR) Metaverse unit.
The XR unit was formed in June 2022 and has over 300 staff. Now, with Tencent adopting a new strategy, members of the unit must either leave the company or find another position.
The move reflects the sudden turn of the Chinese tech giant. The company appears to be moving away from its strategy of building virtual reality (VR) hardware and software. Instead, Tencent is pursuing more cost-effective ways as part of its new metaverse strategy.
what went wrong
There are multiple reasons for the company’s rapid turnaround. According to sources close to Tencent, the company does not believe his XR project can achieve profitability quickly enough. Additionally, the prospects for the XR project are bleak due to the lack of promising gaming and non-gaming applications. As such, the company is scaling back its XR ambitions.
Tencent is now the world’s largest video game publisher. Moreover, he is one of the most financially valuable companies in the world in terms of market capitalization. In fact, the company owns the application WeChat, which is very popular in Chinese society.
The company’s XR division includes augmented reality (AR), virtual reality (VR), and mixed reality (MR). But the company’s big bet on metaverse technology seems to have backfired.
Despite this, Tencent is still an important player in emerging technology markets. The company is cutting costs and scaling back its XR plans, but will continue to pursue and leverage Web3 tools. Essentially, the company has adapted to tough economic conditions and hedged its bets accordingly – like many other tech giants.
Let’s not forget that Microsoft recently laid off the entire industrial metaverse project team. Additionally, Meta’s metaverse arm, Reality Labs, will lose him $13.7 billion in 2022.