ByteDance, best known for its popular TikTok app, is facing massive layoffs at its gaming division Nuverse (known as the publisher of Marvel Snap). The decision came after two years of efforts to establish a significant presence in the video game market, which did not produce the expected results.
By the end of 2021, ByteDance announced its ambitions in the gaming industry, identifying it as one of the company’s six key development areas. Tencent, NetEase, MiHoYo and other gaming giants saw ByteDance as a potential competitor. However, Nuverse’s performance fell short of expectations.
A ByteDance representative commented on the situation: “We regularly review our business direction and focus on long-term strategic growth areas. As a result of our recent review, we have made the difficult decision to restructure our gaming business.“
The layoffs began Monday and many Nuverse employees are still in the dark about their future. Although the number of layoffs was not disclosed, Nuverse employed about 3,000 people in 2021 and the size has remained stable in recent years. ByteDance has invested in a number of companies, including buying Shanghai studio Moonton for $4 billion. However, according to Reuters, ByteDance is considering selling the studio and is currently in negotiations with a Saudi Arabian company.
According to Reuters, remaining Nuverse employees will be ordered to stop working on unreleased games until December, while ByteDance will look for a way to gradually move away from already released projects. The Chinese company has decided to leave the gaming market and has no plans to return.
ByteDance’s failures in the gaming industry call into question the effectiveness of its strategy that propelled TikTok to global fame. Video games require a longer and more patient development approach compared to short videos. ByteDance’s competitors, Tencent and NetEase, are investing more in projects with longer production cycles.
Mass layoffs at Nuverse were another negative development for the Chinese IT industry, which is currently in a period of regulatory restrictions. These measures had a serious impact on business activity in the area and led to job losses. The gaming industry in particular has faced difficulties due to the suspension of game licensing and the industry’s recovery continues to slow due to macroeconomic factors.