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ByteDance’s gaming ambition was costly and short-lived.
In late 2021, the TikTok parent company announced that video games would be one of its six core business units, threatening Tencent, NetEase, and rising star MiHoYo. After two years of poor performance, Nuverse, the gaming department, is drastically scaling back its operations, surprising many employees.
“We regularly review our businesses and adjust to focus on long-term strategic growth. A ByteDance spokesperson said, “We’ve made the difficult decision to restructure our gaming business after a recent review.”
This round of mass layoffs began on Monday, and many Nuverse employees are still waiting for their fate, sources told According to Chinese tech news outlet LatePost, Nuverse had quickly grown to around 3,000 people in 2021 and has maintained that size over the past few years. It’s unclear how many employees the restructuring will affect.
ByteDance also made big acquisitions, including a $4 billion buy of the promising Shanghai studio Moonton. The firm met with a Saudi Arabian firm to discuss selling the studio, Reuters reported earlier this month.
On Monday morning, Reuters reported that ByteDance would soon announce the “winding down of its Nuverse gaming brand and full retreat from mainstream video games,” citing sources. ByteDance’s comment implies team members will stay.
ByteDance’s struggles in video games and virtual reality with Pico cast doubt on its data-driven A/B testing strategy that propelled TikTok to global dominance. ByteDance has unparalleled consumer insights from its short video apps. Video game success requires a longer, more patient creative process and is less predictable than dopamine-fused video clips. Tencent and NetEase are investing more in games with longer development cycles.
After two years without a breakthrough title or commercial success, ByteDance’s management team may be scrutinizing Nuverse’s revenue driver status. Due to rising U.S.-China tensions, ByteDance is one of the few Chinese internet giants not to go public.
The widespread Nuverse layoffs exacerbate the situation in the Chinese internet industry, which has already suffered from a harsh regulatory crackdown that has hurt businesses and eliminated jobs. License approvals were halted for the video gaming industry, and while the process has resumed, macroeconomic issues have slowed its recovery.
