TikTok owner ByteDance is pulling back from the video game industry, resulting in hundreds of job cuts. The Beijing-based tech giant will be winding down Nuverse, the unit that houses its video game studios, next month as it refocuses on its core businesses.
“We are streamlining our focus to support our core businesses and prioritize efficiency,” a ByteDance spokesperson told CNN Business. “As part of this effort, we have decided to wind down our Nuverse operations.”
The move comes amid a broader economic slowdown in China, which has also impacted the gaming industry. “Many game companies in China are facing challenges due to the slowing economy and stricter regulations,” said Niko Partners analyst Daniel Ahmad. “ByteDance’s decision to retreat from gaming is likely a reflection of these challenges.”
ByteDance had recently invested heavily in gaming, acquiring several studios and developing its own titles. However, the company has struggled to succeed significantly in the highly competitive gaming market.
“ByteDance has invested a lot in the game business but not had a big success,” said Lisa Hanson, CEO of Niko Partners. “It takes a huge amount of investment to produce [blockbuster] titles.”
The decision to wind down Nuverse will result in layoffs for hundreds of employees. “We are working closely with our affected employees to provide them with support and resources during this transition,” said the ByteDance spokesperson.
ByteDance’s retreat from gaming comes as other tech giants are also facing challenges in the industry. Meta, the parent company of Facebook, has laid off thousands of employees in its gaming division, while Microsoft has slowed down its gaming investments.
“The global gaming industry is facing several challenges, including rising costs, increased competition, and a slowdown in consumer spending,” said Ahmad. “As a result, we will likely see more industry consolidation and restructuring in the coming months.”