The dawn of 2023 has seen crypto assets break free of suppresive year-long price action. But with many in tech betting big on the Metaverse at the start of 2022, things are getting ugly.
In an exclusive report from Chinese news outlet 36 Krypton. It has been revealed that the world’s largest video games company Tencent will be partially disbanding its XR (extended reality) department.
On February 16, Tencent’s General Manager sent out redundancy notices via the HR department. The email offered XR team members a redundancy buffer period to seek other internal or external opportunities.
With more than 300 employees across 9 offices forming the XR department, this could be the biggest metaverse layoff to date.
Closures could also impact the visual labs team (80 staff), the spatial audio technology centre, and the business decision making committee.
Tencent’s Disastrous Metaverse Adventure
Far from unexpected. This comes following January’s news that Tencent had suspended XR department operations. And in the aftermath of Uncle Li (the ‘soul of Tencent’) leaving the company back in November – in what became a huge knock to investor confidence.
The short-lived adventure into metaverse tech saw Tencent chasing opportunities in the Chinese domestic market.
An initial multi-billion bid to acquire augmented reality (AR) headset manufacturer PICO was thwarted by a better bid from rival Byte.
Subsequent acquisitions of domestic AR technology manufactures Yingchuang and Blackshark also ended in failure.
Sources close to 36 Krypton allege that despite all the capital investment. There was almost no employees in the XR department with experience in AR hardware development.
Ultimately, these AR flops and acquisition failures have left Tencent out positioned in the Chinese domestic market.
Byte PICO and rival iQiyi Qiyu have captured more than half of Chinese domestic metaverse market share. And the Chinese consumer AR technology market is increasingly dominated by Rokid and Nreal.
Big Tech Flounders in Metaverse Folly?
Major players across the West including Facebook (now Meta) and JP Morgan took aim at the metaverse in 2022. With such significant capital investment from such big names.
Many saw the adoption of metaverse technology as inevitable. Yet the metaverse has become more of a folly in recent months.
The number of tweets about the metaverse dropped by an average of 1,000 per day during the first six months of 2022. The online conversation shrunk -80% globally by the end of the year.
Data from Improbable also revealed that the metaverses’ adoptive userbase has struggled to go mainstream.
Over 10% of metaverse users in 2022 were US news reporters.
An additional 11.7% of total users were simply the Bored Ape Yacht Club.
With 1/5th of metaverse users either investigating it for a quick news piece, or, using it to connect with fellow apes. A picture of an overhyped tech bubble begins to emerge.
And this trouble chicken has come home to roost for big tech.
With the news that Meta’s Reality Labs has descended to money pit status. Costing an eye-watering $1bn a month, that’s $4.28bn in Q4 2022 alone.
And with CEO Mark Zuckerberg’s fortune consequently plunging by $100bn in just 13 months.
It is clear that betting big doesn’t always pay off.
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