ByteDance Ltd, the parent company of TikTok, plans substantial cutbacks in its gaming division, including job cuts, project terminations, and potential sales of existing titles, according to multiple reports.
The move signals ByteDance's significant withdrawal from the competitive gaming industry, dominated by Tencent.
The closure of its showpiece brand, Nuverse, represents ByteDance's largest retreat from the gaming sector, where it had aimed to compete with industry leaders.
ByteDance has struggled to gain market share from Tencent in the gaming industry. The company is considering selling Shanghai Moonton Technology Co., a studio acquired for $4 billion in 2021.
The decision also aligns with ByteDance's recent focus on core businesses like short-video platforms TikTok and Douyin, and ecommerce.
The restructuring is part of ByteDance's broader review of businesses, focusing on long-term strategic growth areas. The layoffs, which started on Monday, leave employees at Nuverse uncertain about their future.
The setbacks in gaming and the virtual reality arm, Pico, raise questions about the universal applicability of ByteDance's data-driven, A/B testing strategy that propelled TikTok to global dominance. The company's struggles underscore the challenges in the gaming industry, where creative processes and success are less predictable than the instant gratification of short videos.