Tencent is allegedly scrapping development for a new VR headset due to profitability concerns and high investment costs.
After setting up an internal XR unit to create VR software and hardware last June, Reuters reports that’s been scrapped and the unit’s 300 staff members are being told to seek other employment opportunities. Citing anonymous sources, it’s said Tencent’s internal economic forecasts suggested this venture wouldn’t be profitable until 2027. It’s also claimed that the unnamed VR headset lacked promising games and non-gaming applications.
It doesn’t sound like development got particularly far, either. The report suggests Tencent got as far as creating a “ring-like hand-held game controller” concept, though short-term profitability worries, high investment costs and a “sobering economic outlook” within China saw the multinational conglomerate reconsider this approach. “Under the company’s new strategy as a whole, it no longer quite fit in,” one source is quoted as saying.
Tencent aren’t strangers to virtual reality and investments go as far back as 2015, later live-streaming VR concerts for music artists. Reportedly, Tencent’s renewed interest in VR came in 2021, following new developments with pancake lenses and improved displays, which was further encouraged by high Meta Quest 2 sales.
This doesn’t signal an end to Tencent’s investment in VR, however, with stakes in both Epic Games and Skydance Media, whose gaming division Skydance Interactive developed Archangel: Hellfire, The Walking Dead: Saints & Sinners and Chapter 2: Retribution, alongside upcoming action RPG Behemoth. More recently, Tencent participated in Skydance’s $400 million strategic investment round last October.