Tencent has decided to suspend any further development when it comes to its VR hardware, sources reported to Reuters. The Chinese video game publisher is the largest of its kind in the world and had both software and hardware plans in the extended reality (XR) market, however, insiders claim this is not the case anymore, and Tencent is abandoning the project.
In June 2022, Tencent launched an XR team that consisted of almost 300 people. Virtual reality is a booming business currently; last year GlobeNewswire reported that it was "valued at $7.5 Billion in 2021 and is projected to reach a value of $37 Billion by 2028." There are already plenty of companies that create games, and various applications for VR, not to mention the headsets themselves. The Meta Quest is one of the most widely used and known brands for gamers next to the PlayStation VR, with the PlayStation VR2 coming on February 22, but the list could go on with such brands as Microsoft, HTC, or Google. It seems like a worthy market to join, yet Tencent allegedly ran into complications.
Three different sources within Tencent came forward to report on the cancelation of the project, but none of them wanted to be named as this is confidential information. Apparently, the reason Tencent no longer wants to continue its work with VR is due to economic reasons. The company came up with a "ring-like hand-held game controller," but according to one of the sources, an internal forecast said the XR project was not projected to become profitable until 2027. Knowing the high number of companies Tencent invests in and the projects it nurses, it's understandable to wish for quick profits. Another issue was the fact Tencent didn't feel hopeful about any of the games or other applications it was working on.
However, when Tencent was directly asked to comment on these reports the answer wasn't straightforward. The Chinese company said the development plans for its hardware have taken a different direction and because of that it's restructuring some of the business teams. But it denied the claims of the XR unit being scrapped. Nevertheless, as a direct result of Reuters' report, Tencent shares have dropped by 2.5%. The ambitions of VR hardware did come as a surprise for most from a company that mainly handles software, although one of the sources said Tencent did actually dip into the VR world 7 years ago, and its interest was revived by new breakthroughs in technology.
On the flip side of this now plenty of companies are letting go of staff as the fear rises about the possibility of a global recession. Among those companies were major VR competitors Meta and Google as well. So while the market as a whole seems promising, it does seem companies fear making big leaps in the current financial climate.
Source: GlobeNewswire