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Reuters: Tencent plans to end VR project

Chinese technology company Tencent plans to abandon its XR virtual reality equipment project, Reuters reported, citing three sources. Against the backdrop of a difficult economic situation, the corporation is forced to reduce costs and the number of personnel employed in the division of the metaverse.

Tencent launched its VR business last year and hired 300 people for it. The company developed the concept of a game controller, but difficulties in achieving quick profitability and investment prompted Tencent to curtail the project, a Reuters source told Reuters.

According to the corporation's internal forecast, the XR project will not become profitable until 2027. A second source pointed out that there are too few up-and-coming games and non-gaming apps for the device. According to the interlocutor of the agency, the project does not fit into the company's new strategy.

Last year, Tencent planned to buy gaming phone maker Black Shark to improve its hardware and add 1,000 people to its VR hardware division. Tencent pulled out of the deal after a strategy change and increased regulatory scrutiny.

On Feb. 16, Tencent management advised more than 300 employees in the division to look for other jobs.

The company is making adjustments to some business groups due to changes in hardware development plans, Tencent said. They added that the corporation does not dissolve the XR division. Tencent shares fell 2.5% following Reuters' report of possible cuts in the division.

Tencent was briefly involved in VR technology about seven years ago, but its interest in this area has revived in 2021. Tencent was attracted by strong sales of the Meta* Quest headset, the source added.

The past year has been a difficult one for Tencent, with the company's revenue falling due to restrictive measures to contain COVID-19. In December, Tencent founder Pony Ma criticized the top management of the corporation for not working hard enough. Tencent should focus on short videos for future growth, he said.

Reuters: Tencent plans to end VR project