ByteDance, the parent company of social media juggernaut TikTok, has vehemently dismissed rumors suggesting the potential shutdown of its VR enterprise, Pico.
With Pico headsets dominating 58% of the VR market in China, ByteDance’s affirmation comes at a pivotal time, especially when its main rival, Meta, has yet to penetrate the Chinese market with its hardware.
ByteDance’s acquisition of Pico in 2021 was a strategic move to assert its presence in the booming metaverse realm. With its VR headsets, Pico has remarkably captured a 58.7% share of the VR market in China during the first half of 2023.
Per experts, this is particularly impressive given that Meta’s Quest hardware, a significant competitor in the global market, hasn’t yet made its debut in China.
A spokesperson for ByteDance informed Reuters,
“The report that we are shutting down Pico is not true. Pico is under normal operation, and the company will continue to invest in the extended reality (XR) business over the long term.”
Notably, concerns arose after reports emerged earlier this year that Pico was trimming its workforce, with claims suggesting a reduction of some teams by nearly 30%. ByteDance confirmed the layoffs and clarified the situation by stating that over 200 employees were impacted.
The metaverse’s winter chill and Pico’s future
There’s no denying that the enthusiasm around the metaverse witnessed a slump in 2022. Data from research company GlobalData reveals a substantial decline in the value of VR and AR financing, acquisitions, and equity-offering deals. This drop from $3.5 billion in 2021 to just over $2 billion in 2022 reflects waning investor interest in the metaverse.
Moreover, Meta’s stock price also took a hit, plummeting nearly 60% of its value from September 2021 to October 2022. However, since then, it has been on a slow recovery trajectory.
In light of these market fluctuations, Pico’s challenges have compounded. Intense global competition, particularly from Meta’s Quest 3, led to a price war in the VR sector. This necessitated Pico offering subsidies to maintain its competitive edge, potentially straining its profitability.
ByteDance’s sales targets for Pico in 2023 also underline the turbulent waters the company is navigating. Aiming for approximately 500,000 units, it’s a significant dip from the ambitious 1 million unit goal set the previous year.
AI overshadows the metaverse
As the metaverse experienced its downtrend, artificial intelligence (AI) emerged as the new darling for investors. A GlobalData Technology Sentiment poll highlighted a prevalent skepticism about the metaverse, with 59% of respondents deeming it mere hype.
While the metaverse’s future remains a topic of debate, tech giants like ByteDance and Meta continue to invest heavily. Mark Zuckerberg, Meta’s CEO, has been unwavering in his metaverse advocacy, earmarking $21 billion for Meta’s VR/AR research project,t Reality Labs, over the past year.
The road ahead for ByteDance’s Pico is filled with opportunities and challenges. While they hold a significant market share in China, the ever-evolving global VR landscape presents unpredictable turns.
How ByteDance steers Pico amidst the fierce competition, market saturation, and the metaverse’s uncertain future will shape the narrative for their VR endeavors in the forthcoming years. Only time will tell if this faith in VR and the metaverse, in general, will pay off in the long run.