As part of its new direction, one of China’s largest companies is reducing its metaverseunit .
According to reports, Tencent has partially disbanded its Extended Reality (XR), metaverse unit.
In June 2022, the XR unit was established and employs over 300 people. Tencent is launching a new strategy and members of the unit may have to leave or move on.
This is a drastic change in direction for the Chinese tech giant. The company appears to be abandoning its strategy of building virtual reality (VR), hardware and software. Tencent’s new metaverse strategy focuses on a cost-effectiveer path.
What went wrong
The company’s sudden change in direction could be due to many reasons. Tencent sources say that Tencent does not believe the XR project can achieve profitability quickly enough. The XR project is also facing a lackluster forecast due to a lack in promising non-gaming games. The company has decided to scale back its XR ambitions.
Tencent is currently the largest publisher of video games in the world. It is also one of the most valuable companies in terms market capitalization. It also owns WeChat, a popular application in China.
The company’s XR unit consists of augmented reality, virtual reality (VR), mixed reality (MR). The company’s huge bet on metaverse technology seems to have backfired.
The bottom line
Tencent remains a major player in the emerging technology market, despite all this. Although Tencent is reducing costs and scaling back its XR plans it will still pursue Web3 tools and leverage them. The company is adapting to the economic climate and hedges its bets accordingly, much like other tech giants.
Microsoft recently laid off its entire industrial-metaverse project team. In 2022, Reality Labs, Meta’s metaverse division lost $13.7 billion.
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