ByteDance, the China-based firm that owns TikTok in addition to one of many greatest abroad VR makers, Pico, is taking an extended take a look at its VR headset enterprise, discovering that each one these metaverse champions had been method too “optimistic” of their estimation that digital actuality would take over the world.

Pico Interactive CEO Zhou Hongwei reportedly advised employees in a companywide assembly that they’ll be making sweeping modifications to how the corporate will make headsets going ahead. He advised employees that the corporate’s earlier estimation of the trade’s market development was “too optimistic,” in line with a report from Reuters in line with three nameless sources.

Pico’s {hardware} staff might be shifting on to creating new know-how. Nonetheless, the corporate is slashing and burning its software program staff, slicing employees or folding them again into ByteDance’s bigger product improvement staff. The nameless sources advised Reuters the headset maker may lower “tons of” of jobs. Gizmodo reached out to ByteDance for remark and clarification on job cuts, however we didn’t instantly hear again.

“The VR trade stays in a really early stage,” Hongwei reportedly advised employees whereas noting it may lay off gross sales, movies, and platform operation employees.

Final month, Pico was telling anyone who would hear that it wasn’t performed but making VR. This was regardless of studies from some evaluation corporations that ByteDance wished to desert its plans for digital actuality. ByteDance initially purchased Pico for an undisclosed quantity, rumored to be greater than $1 billion in 2021. This was simply as Fb was rechristening itself “Meta” and was selling its loss-leading Meta Quest 2 headset.

Pico launched its Pico 4 headset final 12 months, however this 12 months, the corporate has but to have massive {hardware} bulletins to share. Pico then reportedly laid off round 200 employees again in February.

If the VR trade remains to be in its early levels, then corporations like Meta might want to spend billions of {dollars} extra to see their grand VR/AR ambitions come to fruition. Meta simply launched its Meta Quest 3 headset, although we now have but to see how gross sales stack up towards the Quest 2. Up to now, it’s not trying very constructive, as analysts suspect the corporate will ship far fewer headsets this 12 months than the corporate had beforehand. On the identical time, the corporate reported $3.7 billion in third-quarter losses for its VR-focused Actuality Labs division on the finish of final month. That brings the division to $21 billion in losses because the begin of 2022.