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TikTok parent company ByteDance is cutting hundreds of jobs in its gaming division, an individual acquainted with the matter told CNBC, marking a major retreat from a segment it has invested billions of dollars in to challenge market leader Tencent.
“We frequently review our businesses and make adjustments to center on long-term strategic growth areas. Following a recent review, we have made the difficult decision to restructure our gaming business,” a ByteDance spokesperson told CNBC.
The Chinese tech giant’s major gaming division is named Nuverse. Hundreds of jobs are expected to be cut from this unit, an individual acquainted with the matter, who was not authorized to talk publicly, told CNBC. Nuverse is not going to shut down completely but will probably be significantly scaled back, the person said.
ByteDance has also told employees to stop working on unreleased games, the person said. Reuters first reported the news.
Over the past few years, ByteDance has made an aggressive push into gaming in a bid to challenge other gaming giants like China’s Tencent and NetEase.
ByteDance acquired a significant mobile gaming studio called Moonton in 2021 for a reported $4 billion, underscoring its ambitions. The corporate is now trying to sell Moonton, in accordance with the one that spoke to CNBC.
The retreat comes after a tricky couple of years in China’s gaming market which has didn’t recapture the heights reached in the course of the peak of the Covid pandemic when people were shut indoors and playing games. The industry has also faced a tricky regulatory environment, although that has eased of late.
Success in the gaming sector is tough because it relies on an organization creating a gradual stream of hits, in addition to titles that keep players hooked. Tencent, which is the operator of China’s biggest all-in-one app WeChat, publishes Honor of Kings for instance, which is amongst China’s biggest games.
ByteDance has had some popular releases, for instance with Crystal of Atlan, a role-playing motion game, but appears to have struggled to show that into business success.