TikTok Parent ByteDance Starts Mass Layoffs in Gaming – ByteDance’s venture into gaming, once considered a formidable threat to industry giants like Tencent and NetEase, has proven to be a costly and brief endeavor. Despite gaining prominence as one of the company’s core business units in late 2021, the gaming department, Nuverse, is now unexpectedly downsizing after two years of lackluster results, leaving many employees surprised.
“We regularly review our businesses and make adjustments to center on long-term strategic growth areas. Following a recent review, we’ve made the difficult decision to restructure our gaming business,” a ByteDance spokesperson said in a statement. The recent wave of layoffs at Nuverse commenced on Monday, and individuals familiar with the situation said that many Nuverse members are currently awaiting a decision about their future.
The extent of the impact on employees remains uncertain, but in 2021, Nuverse had expanded rapidly to approximately 3,000 personnel and has largely maintained that workforce size in the subsequent years, as reported by the Chinese tech news outlet LatePost. ByteDance’s substantial expenditures on acquisitions, such as the $4 billion acquisition of the promising Shanghai-based studio Moonton, have been notable.
Reuters recently disclosed that the company is exploring divestment options for the studio and has engaged in discussions with a Saudi Arabia-based firm. Reuters first broke the news about the layoffs on Monday morning, reporting that ByteDance would soon announce the “winding down of its Nuverse gaming brand and full retreat from mainstream video games,” citing sources.
However, ByteDance’s statement implies that certain portions of the team will be retained. The challenges faced by ByteDance in the realms of video games and its virtual reality venture, Pico, raise questions about the broad applicability of its data-driven, A/B testing strategy, which propelled TikTok to global dominance. ByteDance, through its short video apps, has accumulated an unparalleled wealth of consumer insights.
Nevertheless, the success of video games requires a more extended and patient creative process, arguably less predictable than the instant gratification offered by dopamine-infused video clips. In contrast, both Tencent and NetEase have been channeling increased resources into games with longer development cycles.
After two years without a breakthrough title or commercial success, Nuverse’s role as one of ByteDance’s key revenue drivers is likely under scrutiny from the company’s management team. ByteDance, unlike many Chinese internet giants, has not gone public, partly due to entanglements in escalating U.S.-China tensions.
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The extensive layoffs at Nuverse contribute to the ongoing challenges in the Chinese internet industry, which is grappling with a widespread regulatory crackdown, resulting in subdued businesses and reduced workforces. The video gaming sector, in particular, faced significant setbacks due to a pause in license approvals. Even though the approval process has resumed, the industry’s recovery remains constrained by macroeconomic challenges.