Pico and Tencent lay off employees in XR departments - Reports
Update 17 February 2023:
Pico confirms the lay-offs, saying that "a small number" of employees will be let go. The company does not give a specific number. According to a Reuters source, more than 200 people are affected.
"While we continue to hire as a business globally, we are streamlining our team and, as a result, parting ways with a small number of colleagues," Pico said in a statement.
Chinese tech group Tencent is also said to be scaling back its XR plans due to the gloomy economic outlook, according to three Reuters sources. The company had set up an XR division in the summer of 2022 to develop hardware and software, with the aim of becoming profitable by 2027. More than 300 people are said to be working in the division, where layoffs are now planned. The report does not say how many.
Original article dated 16 February 2023:
Building VR hardware is still an expensive investment. In tough economic times, this is a luxury that TikTok company Bytedance is apparently cutting back on.
The South China Morning Post, citing two anonymous sources, reports that Bytedance plans to lay off a "significant portion" of its Pico workforce. Some teams will be cut by as much as 30 percent. Management positions are also said to be affected. Hundreds of jobs will be cut.
Those laid off will be compensated according to seniority and with an additional month's salary. Bytedance did not comment on the report when contacted by the SCMP.
Pico sales likely to be lower than expected
The layoffs come amid a global economic downturn that has hit technology companies in particular, which had enjoyed above-average growth in recent years.
In addition, the advertising business, on which Bytedance is heavily dependent, performs worse in a recession. Meta and Google have also recently been forced to lay off thousands of employees as advertising revenues decline.
Last November, there were rumors that Pico's latest VR headset, the Pico 4, had failed to meet its internal sales target. The goal of selling one million VR headsets by 2022 was reportedly missed by a wide margin. In addition, there was allegedly a dispute within the staff.
Pico VR headsets are currently sold in China, Japan, South Korea, Malaysia, Singapore, and 13 European countries. Pico has yet to enter the most commercially attractive market, the United States.
Bytedance learns Meta's lesson
With its social platform TikTok, Bytedance has already given its US competitor Meta a tough time. With the acquisition of the Chinese VR headset manufacturer Pico in the summer of 2021, Bytedance also wanted to catch up early on XR hardware and thus a potential future technology. Like Meta, Pico is likely selling its VR headsets at a loss or with a low margin. The idea is to grow faster through lower hardware prices.
Bytedance is probably learning what Meta has learned many times over the past eight years or so since it acquired Oculus: VR headsets are expensive to make and expensive to sell.
The big question with Bytedance is whether the Chinese social media company has the same staying power and willingness to invest as Meta, which has so far stuck to its Metaverse strategy despite many headwinds.