Three people who know about the situation say that Tencent Holdings has decided not to join the virtual reality (VR) hardware market because it is worried about the Chinese internet giant’s plans to cut costs and the economy’s future.
The company had developed a ring-shaped handheld game controller prototype and planned to manufacture both VR software and hardware for its XR unit, which it launched in June 2022.
But an internal prediction said that the project wouldn’t work until 2027, and the unit didn’t have any good games or non-gaming apps, so they changed how they would do things.
Two people said that the project was put on hold because it was hard to make money quickly, and it would take a lot of money to make a product that could compete.
Because the information is private, the sources declined to give their names.
Moreover, Tencent had plans to buy Black Shark, a manufacturer of gaming phones, which it thought would help its hardware push and bring in an additional 1,000 employees.
But the company later pulled out of the deal because it had changed its strategy, regulators were looking at it more closely, and the review process would take a long time.
The sources say that Tencent has told most people in the unit to look for other options.
The business has acknowledged that some business teams are being adjusted as hardware development plans change, but the XR unit still needs to be abolished.
Tencent hasn’t said anything about the Black Shark deal or whether Beijing’s inspection made the deal bad.
However, according to the Reuters report, Tencent’s shares decreased by 2.5%.
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