One of Kuaishou’s video gaming projects in Beijing was disbanded and shut down in March after the new game it was developing failed to pass certain internal tests, according to a report on Monday by Chinese media outlet CoreEsports.
Around 30 employees were laid off, while a few like Beijing project head Lin Yancheng were transferred to other Kuaishou units, the report said. Kuaishou still runs a number of video gaming operations in Beijing, Shanghai, Guangdong provincial capital Guangzhou and Hangzhou, the capital of eastern Zhejiang province.
Kuaishou did not immediately respond to a request for comment. The company’s Hong Kong-listed shares closed 1.32 per cent lower at HK$55.95 on Tuesday.
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The pullback by Kuaishou reflects stagnating growth in the domestic video gaming sector, which has seen a wave of cost-cutting and lay-offs amid economic headwinds and regulatory pressure.
TikTok and Douyin operator ByteDance last November cut hundreds of jobs at flagship gaming studio Nuverse after telling employees that it would close most game projects that have not been released online.
Bilibili, the Shanghai-based video-sharing platform operator, has also restructured its operations to scale back on video gaming, which once accounted for more than 80 per cent of its total revenue.
Kuaishou set up its video gaming subsidiary, Spark Nexa, in 2021 to focus on self-developed games from a network of studios based in multiple Chinese cities including Beijing, Shanghai, Guangzhou and Hangzhou.
Kuaishou Technology’s revenue growth last year was primarily made on the back of its live streaming and online marketing businesses. Photo: Shutterstock
In March and April, China’s video gaming regulator approved Kuaishou’s domestic release of two video games, Lord of Mysteries and Wujinmenghui, respectively. The company’s video gaming business, however, has so far failed to contribute significant revenue to Kuaishou.
Kuaishou last year reported total revenue of 113.5 billion yuan (US$15.67 billion), up 20.5 per cent from 2022, which was mostly attributed to its online marketing and live streaming businesses. Video gaming was barely mentioned in the company’s financial earnings last year.
According to data from the China Audio-Video and Digital Publishing Association, the country’s semi-official industry body, video game revenue nationwide rose 14 per cent year on year to 303 billion yuan in 2023.
While that compares favourably to the 10.3 per cent decline in 2022, it remains far behind the industry’s 38 per cent revenue growth a decade ago.
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