tencent is leaving its plans to enter the virtual reality hardware marketas economic prospects prompted the Chinese tech giant to cut costs and staff at its metaverse unit.
The biggest video game publisher in the world had Ambitious plans to build virtual reality software and hardware in an XR unit of “extended reality” that was launched in June last year and for which it hired almost 300 people.
Tencent had envisioned a ring-like handheld game controller, but difficulties in achieving quick profitability and the large investment needed to make a competitive product were some of the factors that led to the abandonment of that strategy, according to the sources.
Apparently, Tencent did not expect the XR project to be profitable until 2027, according to its internal forecasts. In addition, the lack of promising games and non-game apps also played a role.
One of the sources said that Tencent became interested in virtual reality about seven years ago for a short period of time, and that its interest in the field was revived in 2021 after learning of new advances in glasses and more powerful screens. Strong sales of Meta’s Quest headphones were also a driving factor.
However, last year was one of the toughest for Tencent since its founding in 1998, with revenue hit by a series of regulatory measures and a headwind stemming from measures to stop the spread of the COVID-19 virus.
Several tech companies, including Meta and Google, have announced layoffs to cut spending amid growing fears of a global recession.
