Chinese technology giant Tencent ( OTCPK:TCEHY ) has reportedly cast aside its plans to build virtual reality hardware and software as it looks to cut costs and focus on profitability.
Citing sources familiar with the matter, Reuters reported that Tencent ( OTCPK:TCEHY ) had come up with a concept for a ring-like gaming controller, but it was unable to be profitable in short order and the investment needed to compete was a deciding factory in eschewing the strategy.
The virtual reality software and hardware were part of Tencent's ( OTCPK:TCEHY ) extended reality unit that was unveiled this past June, but the project was not expected to be profitable until 2027 at the earliest, the news outlet added, citing one of the sources.
Another source added the unit did not have much in the way of promising games and non-gaming applications.
Tencent ( OTCPK:TCEHY ) publicly said this week that it is not disbanding its extended reality unit. However, the sources told Reuters that most of the staff for the unit had been told to look for other employment opportunities.
Last year, Tencent ( OTCPK:TCEHY ) and several other Chinese tech companies, let go employees as part of cost-saving measures due to China's crackdown on its technology industry and slowing growth. Some of Tencent's ( OTCPK:TCEHY ) layoffs occurred in its video game unit that runs gamer communities and some in-house game developer studios.
Tencent ( OTCPK:TCEHY ) was recently listed among the video game companies that were granted approval by China for 87 online game licenses in February .
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Tencent said to cast aside plans to build virtual reality software, hardware