Tencent Joins the Metaverse Race with New ‘Extended Reality’ Unit

Chinese technology and entertainment giant Tencent has jumped on the metaverse train with a new ‘extended reality’ unit.
Image source: jingdaily.com

Quick take:

  • Tencent is reportedly launching a new extended reality unit amid the metaverse craze.
  • The company is said to have announced to its staff on Monday what is perceived as a bet on virtual worlds.
  • The unit will be led by Tencent Games Global CTO Li Shen and could have up to 300 staff, the sources said.

Tencent is joining the metaverse craze according to people familiar with the matter. The Chinese technology and entertainment conglomerate announced to the staff on Monday the official formation of an extended reality unit. 

The move is seen as the company’s formal foray into the metaverse as it targets the opportunity presented by the concept of virtual worlds.

The new unit will build the company’s extended reality business, including both hardware and sources, and will be led by Tencent Games Global Chief Technology Officer Li Shen, the sources said.

Eventually, the unit could have 300 staff and will be part of Tencent’s Interactive Entertainment business group. The projected staff count was a surprise to two of the sources, who cited the company’s recent staff cutting measures and a relatively slower hiring rate.

Tencent reportedly launched the extended reality unit earlier this year but kept it in secrecy until now. Extended reality utilises both augmented and virtual reality technologies to enable immersive experiences in the metaverse.

The metaverse is a 3D virtual space where people can interact with each other, engage in experiential activities and participate in virtual events as 3D avatars. McKinsey & Co, recently estimated that the metaverse could reach $5 trillion in market value by 2030, while previous estimates by Goldman Sachs, Morgan Stanley and Citigroup put the figure at approximately $8-$13 trillion.

Whilst still holding strong restrictions on cryptocurrencies, China has been one of the leading countries in terms of companies foraying into the metaverse. Alibaba Cloud has a suite of metaverse-related services and in March backed AR glasses maker Nreal’s $60 million raise.

Tencent which made its metaverse debut with a virtual concert event on New Year’s eve seems to be taking a deeper dive into the immersive virtual space. The company is not known for its presence in hardware. Its new unit makes a unit divergence from its software-heavy business.

However, one source thinks that the new business unit launched by China’s most valuable company could be a passion project by Tencent founder Pony Ma, who reportedly called it an “all-real internet” in 2020, in his own description of the metaverse.

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