• Tencent’s XR department is partially disbanding due to failed investments and acquisitions in the Chinese domestic market.
• The closure could impact more than 300 employees across various departments and offices.
• Big tech players have pulled back investment in the metaverse, leading to a drop in interest and adoption of metaverse technology.
Tencent’s Disastrous Metaverse Adventure
Tencent, the world’s largest video games company, has announced a partial disbandment of its XR (extended reality) department after unsuccessful investments and acquisitions in the Chinese domestic market. On February 16, Tencent’s General Manager sent out redundancy notices via the HR department, offering XR team members a redundancy buffer period to seek other internal or external opportunities. With more than 300 employees across nine offices forming the XR department, this could be the biggest metaverse layoff to date.
Failed Investments & Acquisitions
The unfortunate news comes following January’s news that Tencent had suspended XR department operations due to an initial multi-billion bid to acquire augmented reality (AR) headset manufacturer PICO being thwarted by a better bid from rival Byte. Subsequent acquisitions of domestic AR technology manufactures Yingchuang and Blackshark also ended in failure, with sources close to 36KR alleging that despite all the capital investment there were almost no employees in the XR department with experience in AR hardware development. This has left Tencent out-positioned in the Chinese domestic market as Byte PICO and rival iQiyi Qiyu have captured more than half of it.
Big Tech Flounders In Metaverse Folly?
At the start of 2022 many big tech companies were betting big on metaverse technology but now things are getting ugly as major players such as Facebook (now Meta)and JP Morgan pull back their investment into it. This has led to a drop in interest and adoption of metaverse technology as evidenced by a decrease in tweets about it on social media platforms.
The Chinese Consumer AR Technology Market
The Chinese consumer AR technology market is increasingly dominated by Rokid and Nreal who are better positioned than Tencent due to their successful investments into hardware development experience which they have been able to use effectively within this sector of tech industry .
Despite initially investing heavily into extended reality technologies such as augmented reality headsets ,Tencent ultimately failed at capturing significant share within this field due its lack of experience when it came down hardware development . As a result ,other companies such as Rokid ,Nreal and Byte Pico were able capture majority share within this field leaving Tencnet at disadvantageous position .