ByteDance, owner of TikTok and Douyin, has initiated a plan to restructure its activities with a focus on new projects and video games beyond short video and social media applications. The Chinese technology company has plans for massive adjustments, closing projects and the sale of some subsidiaries.
Specifically, according to Reuters, the owner of TikTok will lay off several hundred employees, cancel ongoing projects and consider the sale of some of the titles in its portfolio such as Mobile Legends: Bang Bang. The Chinese company intends to announce these measures next Monday, according to a person who asked to remain anonymous as this is a negotiation.
This setback represents the biggest step back for the thriving ByteDance within the gaming industry, which it entered three years ago with the expectations of becoming a major competitor in the sector. Tencent, owner of WeChat, continues to dominate the mobile gaming and major production scene in China and other countries.
The unlisted tech major has gradually scaled back its gaming ambitions following the pandemic as it failed to gain significant market share against Tencent and other competitors.
Additionally, within this strategic review, Bytedance would be considering the sale of Shanghai Moonton Technology, a leading video game studio that it bought in 2021 for $4 billion. This is the company that created ‘Mobil Legends’: Bang Bang, one of the trendy titles among the Chinese.
Defeat in games, victory in social networks
“We regularly review our operations and make adjustments to focus on areas of long-term strategic growth. Following a recent review, we have made the difficult decision to restructure our gaming business,” a ByteDance spokesperson told The Star newspaper.
ByteDance, founded more than a decade ago by Zhang Yiming and Liang Rubo, has become an internet leader with a valuation of $200 billion thanks to the popularity of Douyin and its Western version TikTok.
In recent years, the company acquired studios and exclusive title distribution rights with the aim of carving out a niche in the gaming business in the same way it altered the social media landscape, unseating Facebook in social media, Instagram, Weibo or WeChat.
This step back by the startup coincides with a time when the Chinese mobile games sector, the largest in the world, is struggling to recover from the effects of the pandemic amid a global recession.
Despite this, industry leader Tencent has managed to maintain growth driven by its strong portfolio and resilient consumption in larger segments such as online entertainment. However, game creation is known for being a volatile business.
Since last year, ByteDance has been closing internal studios and cutting development jobs as it shifts its focus to core areas such as short videos and e-commerce. This month, it has also cut nearly a quarter of its staff in the pico virtual reality division.
One of ByteDance’s biggest hits is Crystal of Atlan, a mobile action role-playing game that debuted to great excitement over the summer. Globally, the owner of TikTok publishes the successful card game Marvel Snap, developed by the American studio Second Dinner.
Despite its efforts, Tencent remains the undisputed leader in the sector. The company, which benefits from huge user traffic through its all-in-one messaging service WeChat, has amassed a vast library of content both in China and abroad through acquisitions.
THE NAIS IS OFFICIAL EDITOR ON NAIS NEWS