FB Pixel no scriptByteDance faces Pico predicament despite denying plans to close VR business | KrASIA

ByteDance faces Pico predicament despite denying plans to close VR business

Written by KrASIA Connection Published on   3 mins read

Intense competition, layoffs, and dwindling market share pose significant challenges for ByteDance’s VR headset business.

Rumors have recently circulated regarding TikTok owner ByteDance’s plans to gradually phase out its virtual reality headset business, Pico.

In a statement shared with Reuters, ByteDance denied these speculations.

“The report that we are shutting down Pico is not true. Pico is under normal operation and the company will continue to invest in the extended reality business over the long term,” said ByteDance in the statement. Extended reality, or XR for short, is a broader term that comprises both VR and other headset-related technologies.

Nonetheless, emerging signs suggest that ByteDance’s VR ambitions may be facing challenges.

ByteDance entered the VR realm with its acquisition of Pico in August 2021, seen as a strategic move to capitalize on the metaverse trend ignited by US tech giant Meta. This placed ByteDance in direct competition with Meta, known for its Oculus devices. ByteDance’s endeavors led to the launch of the Pico 4 headset in October 2022, which received positive feedback, especially in its home market of China.

Despite Pico’s initial success, the VR landscape grew fiercely competitive, with established players like Meta, Dapeng VR, and HTC all vying for dominance. In 2023, the industry began grappling with weak demand, resulting in unsold VR devices accumulating across numerous manufacturers and distribution channels, sparking concerns about the market’s sustainability.

According to research conducted by the International Data Corporation (IDC), worldwide shipments of augmented reality (AR) and VR headsets experienced a sharp 44.6% year-over-year decline in the second quarter of 2023. ByteDance, including Pico, held a 9.6% share of the global AR and VR market, ranking as the third-largest vendor, trailing Meta and Sony, though its market share increased compared to the first quarter (6.1%).

However, 36Kr reported that ByteDance’s Pico performed well in China’s VR sector during the first half of 2023, capturing 58.7% of the domestic market. Nevertheless, it has lagged behind Meta, having almost achieved parity on a global scale in Q4 2022.

Compounding these challenges are reports of layoffs at Pico. Although the company described these layoffs as affecting only a small number of employees, local media sources indicated otherwise, suggesting that significant workforce reductions had taken place.  According to a report by 36Kr, at its peak, Pico employed over 2,000 individuals, and nearly half of this workforce is slated to depart the company as part of the ongoing layoffs. In response, a Pico spokesperson issued a statement, acknowledging internal streamlining efforts within the company.

ByteDance’s sales target for 2023 introduces another layer of uncertainty. The company has set its annual target at approximately 500,000 units, a substantial reduction from the previous year’s goal of 1 million units. This adjustment may reflect the tough climate within the VR market. Intense competition, particularly from Meta’s Quest 2, triggered a price war, prompting Pico to offer subsidies to remain competitive, which could have impacted its bottom line.

While ByteDance has denied rumors of abandonment, present challenges in the form of intensifying competition, market saturation, layoffs, and declining market share are undeniable hurdles in its way. The future of Pico remains uncertain, and ByteDance’s ability to navigate the turbulent VR landscape will ultimately determine its fate in this rapidly evolving industry.


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