pico-interactive — Image courtesy Pico Interactive

Report: TikTok Parent Lays Off Hundreds at VR Subsidiary Pico Interactive, Tencent Scraps VR Plans

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Feb 17, 2023

TikTok parent company ByteDance is reportedly laying off what South China Morning Post maintains will be “hundreds of employees” working at its VR headset manufacturing subsidiary, Pico Interactive. A separate report from Reuters also maintains Chinese tech giant Tencent is scrapping its plans to release a VR headset.

According to two people with knowledge of the Pico layoffs, a substantial portion of the VR headset maker is expected to be affected. The report maintains that some teams will see as much as a 30 percent reduction, while some higher-level positions are also expected to be affected.

After being acquired by ByteDance in August 2021, Pico job postings revealed the company was making a sizable expansion into the US to presumably better compete with Meta on its home turf.

Shortly afterwards, the China-based company then released its latest standalone headset, Pico 4, in Europe and Asia to consumers. Seen a direct competitor to Meta Quest 2, Pico 4 still isn’t officially sold in the US; the headset is currently only available across Japan, Korea, Singapore, Malaysia, and most countries in Europe.

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It was also reported by Chinese tech outlet 36Kr that Tencent, the massive Chinese multinational, was disbanding it 300-person strong XR unit. The company has since refuted this claim with Reuters, stating instead it will be making adjustments to some business teams as development plans for XR hardware had changed.

Citing sources familiar with the restructuring, Reuters reports that Tencent is abandoning plans to release a VR headset due to a sobering economic outlook.

This follows a widening trend of layoffs which have affected nearly every big name in tech, including Google, Meta, Amazon, and Microsoft. Microsoft recently announced it was shuttering its social VR platform AltspaceVR in addition to its XR interface framework, Mixed Reality Toolkit. Meanwhile, Microsoft has also had trouble fulfilling its end of a US defense contract which uses its HoloLens AR headset as the basis of a tactical AR headset.

It was also revealed late last year that Meta was planning to cut discretionary spending and extend its hiring freeze through the first quarter, alongside a layoff which affected nearly 11,000 employees, or around 13 percent of its overall workforce.

Doctor Bambi

Damn, well that’s a massive let down. If they had made it state-side and there was still no hide nor hair of Deckard, this would have been my next headset, granted mostly used for wireless PCVR, but still.
- Jeff Axline
  
  Tencent does not own Tik Tok or Pico. Pico could still release a headset in the US. The Pico layoffs have been lumped in with the Tencent cancellation news and this can lead to confusion. I’m hoping Pico will release a headset in the US soon, though it might be challenging politically for them.
ViRGiN

So, realistically, only valve haven’t really laid people off – but it’s a giant corporation with fewest employees on earth for it’s size and market cap.

Wondering when everyone will get sacked. An online file hosting service can be run pretty much itself especially with ai and algorithms. Valve supposedly pays very competitively (but not enough to prevent talent pouching) so i can foresee cutting some workforce there to hoard even more money by gabe.
- Geogaddi
  
  If you ever marry, your wife is going to be very jealous of your obsession with Valve.
  - ViRGiN
    
    Sounds like getting married is your only goal or lifetime achievement.
    - Chris
      
      Penny drops. That comment tells me you don’t have a partner and are not getting any sex. This completely accounts for your general irritability and trollish comments which seem to be your only contribution to any discussion here. You need to get laid, son.
      - ViRGiN
        
        I can say that this comment is highly inappropriate and disrespectful.
        
        Sexual activity or relationship status should not be used to discredit someone’s opinions or contributions in a discussion. It’s important to focus on the content of someone’s arguments and not their personal life.
        
        In fact, making assumptions about someone’s personal life or attacking them based on it is a form of ad hominem fallacy, which is a logical error in arguing a point. It’s best to ignore such comments and continue the discussion with relevant arguments and respectful communication, of which you are clearly incapable of.
- Ookami
  
  Valve really do be living rent-free in your mind
  - ViRGiN
    
    Catching each and every valve comment is your fetish
- Christian Schildwaechter
  
  Valve did lay off people from their VR hardware devision, reportedly half the team was fired within one month, and several agreements with external contractors were terminated at the same time. This may have slipped the mind, because it already happened in March 2019, and half the team meant 13 people, so not quite as impressive as Pico firing 300. And probably a sign that they won’t have to fire the rest of them, as they had several years of time to do that and it is unlikely that firing 13 people will lead to any significant cost reduction or revenue increase for Valve’s money printing business.
  - kontis
    
    Valve fired many XR people in 2013 (like Jerri Elsworth, who started their entire hardware laboratory..).
    
    And it wasn’t an indicator of losing interest in XR, quite the opposite, they went full in.
    
    Valve is a very strange company and hard to read, because it’s big/influential yet private, Gaben has full power and he is an overconfident visionary leader type. These guys can be bold in both successes and failures. It’s interesting, but unpredictable.
Andrew Jakobs

I do hope they are still working on an improved Pico 5 as the Pico 4 is really a good headset and even better as the Quest 2. Shame Tencent is (or seems to be) ditching VR headset plans, as I believe they would have had a good chance of delivering a good affordable headset, and at least it would have been a great competitor to the rest, so improvements on new affordable headsets would regain some more momentum.
- ViRGiN
  
  They can deliver good affordable headset and beyond, but you have zero interest in any of that, cause you are exclusively going to purchase from steam and steam only.
  - Andrew Jakobs
    
    Why wouldn’t I have interest in that? As long as the are also usable for PCVR, just like the Quest and the Pico are.
    - ViRGiN
      
      Not “as long as” but “if it’s working working with PCVR”, and this is exactly where your interaction with potential headset begins and ends – you aren’t spending a dime on standalone library, making “affordable” headset actually impossible.
    - Kenny Thompson
      
      The headset is sold below cost. At their price point, their margin is in sales from their store. If you don’t use the store, the head set is a lost leader.
The Seeker

This was because of the Sony PSVR2
Christian Schildwaechter

This is not only following layoffs at Microsoft and Meta. Microsoft was already pretty much out of the XR picture, and the Meta layoffs were mostly due to lost ad revenue and somewhat countered by a record single day 23% jump back up for Meta shares just two weeks ago, after reporting that Q4’22 numbers were much better than the disastrous Q3.

This also follows an unconfirmed report by Bloomberg from late January that Sony was significantly cutting their projections for PSVR 2 sales due to lower than expected pre-orders, which Sony only countered with a non-denial denial reporting that they hadn’t cut production yet while still in preparation for the PSVR 2 launch. If the Bloomberg report was indeed true, this might have had much bigger implications. Microsoft was pretty much a non-factor and on its way out, Meta had said they are long term committed, even if they don’t make any profits for a decade, as their investment is strategic to become a platform owner. Sony on the other hand seemed reluctant about the future of VR for a long time, only talking about general interest, and after finally announcing the PSVR 2, seems to price it for an enthusiast, higher end gaming market, not as a device that will capture large parts of the PS5 player base.

A lot of faith was put on Sony to rejuvenate the higher end VR market, as much of the investment has moved away from PCVR to mobile VR, and retention is still low. So if Sony was bullish about VR and went full in with lots of new, exciting titles to capture a much larger share of the PS5 market than the 5% the PSVR 1 got on PS4, this would push a lot more VR software development, which in turn would also push PCVR and mobile VR, both through more ports, a higher awareness of the general public and an increased interest for other devices from people who don’t necessarily want to buy a PS5 and PSVR 2.

So a successful PSVR 2 launch could be more important for ByteDance etc. than whatever Microsoft or Meta are currently doing. And consequently a more modest launch reception could be taken as an indicator that the VR market isn’t going to see significant growth in the near future, but things will mostly stay similar to where they are now, with gradual improvements and growth. The tone of the PSVR 2 pre-launch reviews (excluding RE8/GT7) I’ve seen so far was that the device is great, a huge improvement over the PSVR 1 in setup, image quality and general experience, though not exactly revolutionary. A strong buy recommendation for those owning a PS5 and not yet having invested into VR, but mostly a hold and wait for those that already own a Quest or PCVR HMD due to large parts of the announced titles being ports of existing games.

Nobody besides one Bloomberg journalist of a somewhat questionable reputation allegedly quoting a Sony insider has reported about the reduced sales predictions, but TikTok and Tencent may still be worried, mostly by Sony not explicitly stating that pre-orders were actually within expectations or at least that they haven’t halved their predictions, instead only stating they made no changes to production in the pre-lauch phase, as this statement still allows them to cut production once their buffer is large enough for the first few weeks.
TonyVT SkarredGhost

We’re in complex economic conditions and building a VR market is taking more than expected for Pico. So this decision is understandable.
- gothicvillas
  
  It was DOA when it was announced. Meta had its run with underpowered mobile chips. Time to move on and innovate.
kontis

This all sounds like if these suits in the 90s expected this incredible new 3D console “PlayStation” (that would change everything!) to sell 2 billion units, but it only sells 100 milion so you get disappointed that only gamers want it and not the grandmas and Karens, so you abandon the ship.

Ehh.. that actually kinda happened with the Xbox One “watercooler” for “sport and TV” that Microsoft wanted to sell in the range of 1 billion units…
It was a disaster, but then actual gamers kicked in and turned the ship around.

Sony with PS4 being gaming oriented had no issues with the sales. Microsoft believed in a pipe dream, so they got a problem.
If Valve continues to treat VR as pure gaming it may not be that bad, however I remember Gaben being jealous of mobile industry, so you never know – Valve does have some “mainstream” envy moments and wird expectations too, unfortunately.
Walter Sharrow

Until the CCP believes VR is useful to expand Chinese power, there’s no reason for them to waste money and time on it.

TikTok itself only exists to harvest information on a global scale, the Chinese version the same exploitation the US government profits from with Google and Facebook. I’m a little amazed more countries aren’t trying the same thing. I guess it’s handy that the big media companies are so eager to make money promoting it.