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| ByteDance is moving away from the gaming space dominated by Tencent |
ByteDance has closed the game development studio it acquired three years ago and laid off more than 100 employees, a major setback for Tencent's mobile gaming challenge.
The Chinese owner of TikTok 101 Studio in Shanghai was disbanded, causing about half of its 300-plus employees to leave while the rest went through internal transfers.
101 Studio is one of the few major game development companies as the company is looking to expand beyond its core short-form video business.
The shutdown marks a major turning point for the previously booming gaming industry. It's also the first time the company has shut down its entire development division.
The Beijing-based company is now operating under strict content and licensing restrictions, having previously scaled back some gaming projects.
It also has another console under its umbrella, which is shrinking in size during the discontinuation of new game approvals from summer 2021.
As TikTok and its Chinese version of Doin transform the global social media landscape, the company is looking to follow in the footsteps of its biggest competitor Tencent by expanding its mobile gaming presence.
Games make up a large part of mobile app revenue and help in attracting more users to related services like payments and social media.
WeChat directs users to Tencent's wide selection of games. It also helps companies take advantage of in-game purchases.
Founded in 2019, ByteDance's gaming division called Noverse prioritizes big games. The business grew through the acquisition of copyright and creative studios, including 101 Studio, formed from the acquisition of Mokun Technology.
Under ByteDance, the Mokun Technology team has produced a number of games. But neither has had much success in Tencent's $44 billion Chinese gaming market.
ByteDance closes its game development studio in Shanghai
Some Studio 101 employees are expected to move into the publishing department at Novers to develop the games located there. ByteDance is also considering letting Pico handle VR games that Studio 101 is developing.
In March 2019, ByteDance acquired Mokun Technology from previous owner 37 Interactive Entertainment for $16.4 million.
It was part of a series of investments in the game before the game faced antitrust and content censorship in Beijing.
This includes the $4 billion acquisition of Moonton Technology. Mobile Legends is popular in regions like Southeast Asia.
But China's crackdown on major internet and technology companies over the past year and a half has hurt ByteDance's gaming ambitions. Although the economic downturn has affected its core advertising activity.
The company shut down most of its online education business over the past year. She also disbanded her venture capital team and sold a stock trading app.
The moves represent a major streamlining of operations as the Chinese tech giant undergoes a new era of slow growth and more caution.
Over the past year, the company has cut jobs and lost a department head, dealing a huge blow to its entry into casual games.