Four people familiar with the matter said that TikTok maker ByteDance plans to wind down its Nuverse gaming brand and retreat from mainstream video games. The sources said the Chinese technology firm would fire several hundred people, unwind projects under development, and consider selling existing gaming titles at its Shanghai-based Nuverse studio. The move reshapes ByteDance’s gaming operations and hands a victory to rival Tencent Holding Ltd.
The sources said the company will tell staff to stop working on unreleased gaming titles by December and seek ways to divest from titles already released. The sources added that the decision affects hundreds of employees, some of whom learned about it over the weekend. ByteDance has no plans to return to the $185 billion global gaming market, the sources said, declining to be identified as they are not authorized to speak publicly. The company is also seeking buyers for its Shanghai-based gaming studio, Moonton Technology Co., and overhauling its virtual reality headset unit, Pico.
The move follows a series of setbacks for the company, including a fiasco this week where ByteDance’s artificial intelligence (AI) systems were used to spread political propaganda in China. The company has been under pressure to scale back its gaming operations, which were seen as a risky investment given the industry’s volatility.
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ByteDance told Reuters it had decided to restructure its gaming business after a review. It did not disclose details, but the spokesperson said the company regularly reviews its businesses and adjusts to “center on long-term strategic growth areas.”
For ByteDance, the move is a significant blow to its ambitions to be a broad Internet entertainment giant. It has already built a leading position in short video and is trying to establish itself as a global player in online streaming services. Its foray into gaming was meant to help it diversify its offerings and become more indispensable to users.
However, the gaming industry is notoriously volatile, and ByteDance found it more challenging to gain more work to gain traction in the space than expected. It faced stiff competition from Tencent, which dominates the market with its mobile multiplayer online battle arena (MOBA) game Mobile Legends: Bang Bang.
ByteDance’s foray into gaming was also hampered by the fact that it had few internal resources to develop new games and that it had invested in external studios to expand its production capacity. For example, the company bought US-based Second Dinner to develop its Marvel Snap online card game. However, the game had little commercial success. Moreover, ByteDance’s other games, such as its action-adventure title One Piece: The Voyage and its puzzle game Crystal of Atlanta, were not as popular as its main TikTok app. The company has since shifted focus to the core apps and e-commerce operations. Despite the setback, it still has an estimated 1 billion users worldwide. The company is focusing on bringing its products to markets outside of China. Its revenue is expected to grow 60 percent this year.