China's Tencent Holdings announced to its staff the official formation of an "extended reality" (XR) unit, three people familiar with the matter said, formally placing its bets on the metaverse concept of virtual worlds.
The unit is tasked with building up the extended reality business for Tencent including both software and hardware, the sources said, adding that it will be led by Tencent Games Global's Chief Technology Officer Li Shen and will be part of the company's Interactive Entertainment business group.
Two of the sources said the unit will eventually have over 300 staff, a generous figure given how Tencent has been cost cutting and slowing down hiring. However, they also cautioned that the hiring plans are still fluid, as the company will adjust the unit's headcount based on its performance.
The unit was first formed earlier this year but remained shrouded in secrecy, the three sources said. Extended reality is a term that refers to immersive technologies such as virtual reality and augmented reality, which are seen to be the building blocks of the metaverse.
Investors, entrepreneurs and established tech giants around the world have latched on to the concept of the metaverse, ever since Mark Zuckerberg, CEO of Facebook which recently changed its name to Meta Platforms Inc, announced that he would devote the future of his company to building a metaverse.
The introduction of the new team stands in contrast to downsizing happening in other parts of Tencent, which has been implementing cost control measures and scaling back non-core businesses, such as the shuttering of its Penguin Esports unit, to cope with the fall-out from a regulatory crackdown.
Tencent has remained largely coy, publicly, about its metaverse plans. Last November, it told analysts it had a lot of "tech and capability building blocks" to approach the metaverse opportunity, but did not go into details.
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