ByteDance’s Oculus challenger Pico lays off a whole bunch, halts aggressive enlargement

ByteDance’s Oculus challenger Pico lays off a whole bunch, halts aggressive enlargement
ByteDance’s Oculus challenger Pico lays off a whole bunch, halts aggressive enlargement

When Pico launched its Oculus Quest challenger in China final yr, it did so with nice optimism. Gentle (295 grams) and inexpensive ($420), the digital actuality headset launched by the ByteDance-owned producer was anticipated to drive adoption in a market inaccessible to Meta.

The chances have been in opposition to Pico. Its gross sales have been sluggish, and this week, Pico, which was acquired by the TikTok mum or dad two years in the past, initiated a recent spherical of layoffs.

This week, Pico held an inner assembly saying a serious reorganization. An individual acquainted with the matter informed TechCrunch that “a number of hundred” staff have been let go, leaving Pico with “below 2,000” folks.

Even after the layoff, Pico, because it stands at this time, has a considerably greater headcount than the group of 200-300 when it was acquired. The shakeup means that Pico is regrouping to slash prices and pursue extra sustainable progress after a interval of aggressive enlargement.

In a press release, a Pico spokesperson stated that the unit was restructuring to focus extra on “{hardware} and core applied sciences.”

“We ceaselessly assess our enterprise wants and make changes to strengthen our group and higher align our groups with firm objectives,” the spokesperson stated.

Frequent assessments are certainly wanted at a time when China’s post-COVID financial restoration misses expectations. China’s VR shipments shrank by 56% year-over-year within the first half of 2023, in keeping with market analysis agency Counterpoint.

The stoop “marked the top of the Chinese language VR market’s two-year progress streak, spanning 2020-2022, and reverting to a state of stagnation,” the report stated.

The decline was resulting from a number of components. For one, Chinese language customers are spending less amid a weakening financial system. To climate the tepid financial restoration, Pico has scaled again its advertising investments, resulting in a smaller cargo goal, in keeping with Counterpoint’s evaluation.

One other contributing issue is the dearth of high-quality VR content material that’s wanted to drive mass adoption. VR know-how continues to be in its toddler stage of improvement, with {hardware} awaiting some significant developments. At a time when companies are tightening their belt, it solely appears logical for Pico to give attention to bettering its {hardware} slightly than investing closely in content material creation.

Additional including to its gross sales strain is that in China, youth gaming — arguably one of many largest VR shopper classes — is “closely regulated, with difficult content material vetting processes and legally capped display screen time,” recommended Gavin Newton-Tanzer, host of mixed-reality convention AWE Asia. Regulatory limitations additionally “difficult” Pico’s U.S. launch, stated Newton-Tanzer.

“Pico has robust fundamentals, however luck and timing conspired in opposition to them, so a point of restructuring was inevitable resulting from lackluster shopper gross sales,” he added.

“Whereas I firmly consider shopper VR in China may have its breakout second, it simply gained’t be in 2023. On this context, Pico’s option to bide its time and give attention to {hardware} is smart: they’ll proceed to make progress within the B2B market whereas conserving choices open for an additional run on the shopper market sooner or later.”