ByteDance Cuts Pico Staff as VR Market Growth Stagnates

Pico, the virtual reality hardware manufacturer owned by ByteDance, is shifting its strategy toward core technology and hardware development following a significant round of internal layoffs. The move marks a pivot away from the company’s previous phase of rapid, aggressive expansion.

According to sources familiar with the internal reorganization, the company has parted ways with “a few hundred” staff members. Despite the reduction, Pico’s total headcount remains significantly higher than the 200 to 300 employees it employed at the time of its acquisition by ByteDance two years ago, currently standing at fewer than 2,000 workers.

Market Challenges and Strategic Shifts

The restructuring follows a difficult period for the virtual reality sector in China. Data from the market research firm Counterpoint indicates that VR shipments in the region plummeted by 56% year-over-year during the first half of 2023. This decline effectively ended a two-year growth streak that lasted from 2020 through 2022.

Several factors have pressured Pico’s performance:

• Economic Headwinds: Weak consumer spending in China has forced the company to scale back marketing investments and lower shipment targets.
• Content Scarcity: A lack of high-quality VR content has hindered mass-market adoption of the technology.
• Regulatory Environment: Strict regulations on youth gaming, including content vetting and mandatory screen time limits, have limited the growth of one of the largest potential consumer demographics.

Focusing on Hardware and Future Growth

A spokesperson for Pico confirmed the reorganization, stating that the company is realigning its teams to prioritize “hardware and core technologies.” The spokesperson added that the business frequently evaluates its needs to ensure alignment with long-term company goals.

Gavin Newton-Tanzer, host of the AWE Asia conference, noted that while Pico possesses strong technical foundations, the combination of poor timing and an unfavorable economic climate made structural changes unavoidable. “Pico has strong fundamentals, but luck and timing conspired against them,” Newton-Tanzer observed.

He suggested that the company’s decision to shift focus toward hardware and the B2B market is a logical step while waiting for the consumer VR sector to rebound. “In this context, Pico’s choice to bide its time and focus on hardware makes sense: they’ll continue to make progress in the B2B market while keeping options open for another run at the consumer market in the future,” he added.

The company’s previous efforts to capture the market included the launch of a lightweight, 295-gram headset priced at $420, designed to compete with Meta’s hardware in regions where the latter has a limited presence. However, as spending data continues to signal economic caution, Pico is recalibrating its path toward more sustainable growth.