The tech giants in China Tencent and Bytedance have announced plans to reduce headcounts on their Metaverse division. The leading software development company Tencent Holding notified the employees on February 16 plans to dismiss over 300 employees before April, citing the changes made on the extended reality (XR) developments.
Tencent layoff plans coincided with Bytedance disclosing plans to slash a third of employees working in the metaverse Pico unit.
Massive Layoff in Tech Industry
Despite the efforts made by Tencent and Bytedance in exploring the metaverse ecosystem, the tech firms have revealed plans to dismiss hundreds of their core team. Following last year’s crypto market meltdown that plunged crypto firms into a liquidity crisis, the Chinese tech firms took responsive action in halting the developments of their metaverse projects.
The reorganization efforts have mandated the tech firms to downsize their metaverse team. In a February 16 update, Tencent management lamented sacking the 300 employees working on the metaverse unit.
According to the report the test to outperform other tech firms in China motivated Tencent to invest more in the metaverse projects. Later, after witnessing the slow growth of the proposed metaverse projects, the tech firm prioritized reducing their expenses to remain afloat.
Correspondingly, Bytedance metaverse project Pico 4 experienced low investment returns, which compelled the company to reduce 30% of the workforce. A South China Morning report on February 16 revealed that Bytedance downsizing efforts would affect all employees, including top executives.
Based on the Bytedance February 16 report, the company chief executive Henry Zhou lamented over the departure of the Pico team. Zhou confessed that the company expected to close a sale of more than $1 million in 2022. He regretted that the tech company’s marketing efforts failed to attain the desired results in selling the virtual reality (VR) headsets in the previous year.
Initially, Bytedance owned a significant share of the Asian virtual reality sector. A recent report on the Asian VR market demonstrated that Bytedance holds a 15% market share while Meta dominates with 85%.
Why are Tech Firms Reducing their Workforce?
Notably, Bytedance and Tencent’s layoff plans mirror Microsoft and Meta’s recent move to reduce the workforce.
Recently, the tech giant Microsoft announced the closure of some of its metaverse projects, resulting in the dismissal of 10000 staff.
Before this, the team behind Facebook Meta projected losing measurable amounts on the metaverse projects this year. In 2022 Meta launched the first layoff round, dismissing 13% of the employees. Meanwhile, Meta management confessed to experiencing delays in formulating this year’s budget due to uncertainty in the market. Meta is set to announce another headcount reduction due to decreased employee motivation and operational challenges.
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