Last Friday, Chinese media reported that Alibaba laid off dozens of employees from its metaverse division. The e-commerce giant followed in the footsteps of Tencent and ByteDance, which downsized their metaverse and virtual reality divisions.
Yuanjing, the metaverse and cloud gaming division at Alibaba, is undergoing a major restructuring aimed at optimizing the business and improving efficiency. The layoffs are part of this strategy, as the metaverse sector has cooled off drastically.
Alibaba is still working on metaverse apps and tools
The layoffs will have a direct impact on Alibaba’s metaverse division operations in Shanghai and Hangzhou. However, Yuanjiang will focus on developing applications and tools that cater to the metaverse sector. Additionally, the division will continue to offer services to its metaverse clientele. Yuanjing has ongoing cloud gaming projects and open-source initiatives like GeoLRM, which focus on 3D generation. Another project, called ViViD, develops virtual try-on technologies.
Yuanjing was created during the 2021 bull run, at the peak of metaverse hype. The division received billions of Chinese yuan in investment and hired hundreds of employees. During that time, other Chinese tech giants like Tencent, ByteDance, and Kuaishou rushed to register metaverse trademarks with the National Intellectual Property Administration, hoping to catch up with the Web3 trend.
Other US based corporations, like Facebook, rebranded to Meta in an attempt to secure a large market share in the metaverse sector.
Since the release of OpenAI’s ChatGPT, major tech corporations worldwide have been focusing primarily on the artificial intelligence sector. They have downsized other divisions and reallocated capital to support AI development and growth.
In early 2023, Tencent disbanded its extended reality (XR) team which had 300 people. Its XR team was developing software and hardware for the metaverse, however, the project is not expected to be profitable until 2027 according to an internal prediction.
Reality Labs, a division of Mark Zuckerberg’s Meta, reported losses exceeding $4.4 billion. The division is responsible for developing hardware like the Quest VR headsets and other metaverse software. Reality Labs managed to bring in only $270 million in revenue. The value of META stocks declined by 3% after the release of the company’s earnings report.
Today, the market capitalization of metaverse coins stands at $6.9 billion, which is tiny compared to the collective market capitalization of the top 10 cryptocurrencies, valued at $2.1 trillion.
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