Tencent Holdings Ltd. is said to have scrapped plans to develop a VR headset as Metaverse investments industry wide appear to wane in the presence of global economic uncertainties in the tech industry as a whole.
First reported by Reuters, Tencent, the publisher behind massive games such as PUBG, League of Legends, and Valorant, had been in active development of a VR/XR strategy and employing nearly 300 staff for the endeavor.
Sources close to Tencent have said that the reasons they have adjusted their strategy include the significant size of the investment required, the long period of time required to recoup their investment, and the highly competitive nature of the industry. Their projections indicated not turning a profit until 2027.
Other considerations were lack of compelling gaming and application experiences at the ready.
Tencent has also been battling strong headwinds from a tightening regulatory environment and strong competition from competitors like ByteDance who have grown rapidly from their short video segment TikTok.
Speaking of ByteDance, their VR division PICO has announced hundreds of layoffs just a couple of days ago. Other tech giants such as Meta, Google, Microsoft and Twitter have also issued mass layoffs since the fall of 2022. It's unclear how much of this belt-tightening is due to a lowered confidence in the "Metaverse" vision as a whole, and how much is due to greater economic stresses in the tech sector, and the global economy as a whole.
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