Tencent Holdings, the world’s largest video game publisher and owners of Riot Games, have recently scrapped their ambitious plans for new VR hardware. Sources at Reuters say the decision comes as part of a number of cuts made by the company after a sobering reflection on the company’s economics.
Tencent had originally planned to create both virtual reality software and hardware to take advantage of the surge of interest in the so-called “Metaverse.” The company opened up a XR facility in June of 2022 to accomplish this task, where they hired at least 300 people.
The company’s original concept was for a ring-like hand-held game controller, but difficulties in achieving a quick profit led to that idea being scrapped. One source says the project was not expected to become profitable until 2027, and that there was a lack of promising titles to release with it.
2022 was one of the toughest years for Tencent, which saw huge revenue dips due to both COVID lockdowns as well as government regulation changes. The huge financial shift forced Tencent to reevaluate its strategy. According to a statement made by Tencent, part of this new strategy means making adjustments to some of its business teams.
“Under the company’s new strategy as a whole, it no longer quite fit in.” A source said to Reuters regarding Tencent’s VR development.
The company said that they will not be closing the XR unit.
The change in plans also coincides with a loss of interest in the Metaverse, as seemingly more and more people pull away from VR as a whole. Regardless of interest, if Tencent chose to proceed with their investment in VR, they’d have to compete with Western industry titans Meta Platforms (formerly Facebook) and Microsoft, who are both making huge investments in the technology.