ByteDance VR division, Pico, is undergoing a significant overhaul and job cuts, marking its most extensive restructuring since being acquired by the parent company of TikTok two years ago. This move comes amidst a global slowdown in demand for VR headsets, as confirmed by three sources familiar with the matter.
Internal Meeting and Restructuring Plans
During an internal meeting held on Tuesday, Pico revealed plans to retain its hardware team while integrating much of its software team into ByteDance’s own product development unit. Speaking at the meeting, Pico’s CEO Zhou Hongwei acknowledged that the VR industry’s growth had not matched earlier optimistic projections, stating that the industry remains in an early stage of development. As a result, the company aims to refocus on hardware and core technologies, leading to layoffs in departments such as sales, videos, and platform operations.
Although the exact number of job cuts was not disclosed during the meeting, insiders anticipate that “hundreds” of positions globally will be affected. Pico, in response, confirmed a restructuring aimed at concentrating more on hardware and core technologies but refrained from commenting on potential job reductions.
Setback for ByteDance’s Ambitions
The reorganization signifies a setback for ByteDance, which acquired Pico in 2021 for over $1 billion, positioning it as a contender against Meta Platform’s Quest line of VR headsets. Despite ByteDance’s ambitions, the demand for VR has dwindled in recent quarters, with shipments of AR and VR headsets experiencing a consistent decline, plummeting by 44.6% year-on-year in the second quarter, according to IDC data.
Since its acquisition, Pico has aggressively expanded its presence both in China and globally, becoming a leading VR producer domestically and ranking just behind Meta on a global scale. However, as the outlook for VR dimmed, ByteDance scaled down efforts to develop Pico as a distinct brand. This shift has also seen the departure of several senior managers from Pico throughout this year.
Regarding ByteDance’s stance on Pico’s strategic importance and the changes in senior personnel, the company declined to comment. Last month, ByteDance stated its enduring commitment to the VR industry despite reports hinting at a gradual winding down of Pico’s operations.
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