Tencent has given up on virtual reality planning, focusing on cutting costs on the metaverse side.
Tencent, one of the world’s largest video game makers, has an ambitious plan to build both virtual reality software and hardware in its “extended reality” (XR) unit, which it launched in June last year and hired nearly 300 people. However, considering the rising costs and market conditions, the video game company gave up on virtual reality planning.
Tencent Abandoned Its Virtual Reality Plan
Tencent, who came up with a concept for the game controller, had to move away from this strategy due to the difficulties in achieving rapid profitability and the large investments required to produce a competitive product. One of the sources on the subject said that according to one estimate, the XR project is not expected to become profitable until 2027.
The relevant source, who made statements on the subject, said, “It no longer fully fits the new strategy of the company as a whole.” used the phrases. Earlier in the year, Tencent also planned to acquire gaming phone maker Black Shark to strengthen its hardware move and add another thousand employees to the unit.
Tencent eventually withdrew from the deal due to a change in strategy, as well as increased regulatory scrutiny and a lengthy review process, a source with direct knowledge of the matter told Reuters.
Sources said Tencent advised most of its unit staff to look for other opportunities. However, the Chinese tech news outlet confirmed this report at 36Kr. Tencent declined to comment on whether the regulatory review broke the deal. The company told Reuters it is making adjustments to some of its business teams as hardware development plans change. However, the company added that they are not distributing the XR unit.
Last year, Tencent had a tough year due to regulatory pressures and the economic problems created by the Covid-19 pandemic.
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