Tencent, the digital corporation behind the WeChat social media network and the largest company by market cap in China, is rethinking the approach to its metaverse offering and abandoning plans to release virtual reality hardware, thus laying off 300 employees.
The metaverse division of the Chinese computer giant is reportedly slashing costs in the face of deteriorating economic conditions and the wider challenges facing the cryptocurrency ecosystem, according to a Reuters article.
As part of its ambitious aspirations to develop virtual reality software and hardware, Tencent formed its “extended reality” XR branch in June, hiring 300 employees to make it a reality.
The company created a concept for a ring-shaped handheld game controller, but difficulties with profitability, internal forecasts indicated the XR project wouldn’t turn a profit until 2027. The significant investment needed to create a competitive product hindered its development and forced Tencent to change its strategy.
Tencent informed the 300 employees of the XR section on Thursday that there would be some personnel changes and that they had two months to find new internal or external opportunities.
In response to speculations that it was completely disbanding the XR unit, the company said that some business teams were being adjusted since its hardware development ambitions had changed.