ByteDance has closed the game development studio it acquired three years ago, shedding more than 100 jobs in a major setback for its quest to challenge Tencent in mobile games.
The Chinese owner of TikTok 101 Studio in Shanghai has dissolved, leading to the departure of about half of the 300-plus employees while providing internal transfers for the rest.
101 Studio was one of the few major game development houses that the company bet on to advance its expansion into a business beyond its core short video business.
The shutdown marks a major reversal of the previously thriving gaming industry. It also marks the first time the company has shut down a development unit entirely.
The Beijing-based company, now operating under strict content and licensing restrictions, had previously scaled back some gaming projects.
It has another game console under its wing that was downsized during the pause in new game approvals that began in the summer of 2021.
Having disrupted the world’s social media landscape with TikTok and its Chinese version of Doin, the company has sought to follow in the footsteps of its biggest competitor, Tencent, by strengthening its presence in mobile games.
Games represent a large part of mobile app revenue and help in attracting more users of related services such as payments and social media.
WeChat directs users to Tencent’s huge collection of games. It also helps the company take advantage of in-game purchases.
The gaming division that ByteDance founded in 2019, called Noverse, prioritizes big games. The division grew by acquiring copyright and creative studios, including 101 Studio, which emerged through the acquisition of Mokun Technology.
Under the ByteDance umbrella, the Mokun Technology team has produced several games. But none of them have had much success in the $44 billion Chinese gaming market dominated by Tencent.
ByteDance closes game development studio in Shanghai
Some Studio 101 employees are supposed to be transferred to the publishing arm of Novers to work on its existing games. While ByteDance is also considering allowing the pico unit take over the VR game that was in development at Studio 101.
In March 2019, ByteDance bought Mokun Technology from its previous owner 37 Interactive Entertainment for $16.4 million.
It was part of a series of investments in games before they came under antitrust and content scrutiny in Beijing.
This included the $4 billion acquisition of Moonton Technology. Its Mobile Legends game is popular in regions such as Southeast Asia.
But the Chinese crackdown on big internet and technology companies over the past year and a half has dampened ByteDance’s gaming ambitions. While the economic slowdown has hampered its core advertising activity.
Over the past year, the company has shut down most of its online education operations. She also disbanded her venture investment team, and sold a stock trading app.
The moves represent a stark streamlining of operations as China’s tech giants succumb to a new era of slower growth and greater caution.
Its drive into casual gaming also took a hit last year when the company cut some jobs and lost a division leader.
