Tencent just announced to launch massive layoffs at its sports business segment, a day before the world's largest game company posted the worst quarterly performance since its Hong Kong listing in 2004.
BEIJING, May 20 (TMTPOST)— The world’s largest game company is struggling to alleviate the shocks under the tightening regulatory environment and the Covid lockdowns in its home market.
Source: Visual China
Tencent is expanding layoffs to most of its business groups, affecting not just social media and content platforms, the cloud, the advertising but the core business game, which is set to reduce about 10% of workforce, journalists at Caijing, a Chinese magazine mainly covering financial and business news, learned from several insiders at the company’s various businesses.
Tencent’s previous layoffs focused on two groups--PCG (Platform & Content Group), a group integrating QQ, App Store with content platforms such as those engaged on news, videos, sports, animes and movies, and CSIC (Cloud & Smart Industries Group), mainly offering cloud products and services, but the game business now receives the rigid requirements to cut 10% of head count, instead of tempting staff to leave as the latest round of downsizing adopted, Caiing cited a person at the game unit on Friday. It also quoted an insider that Tencent Cloud has started lay off employees since March due to heavy losses and it’s unclear about how many jobs would be axed in the new layoffs. Almost all the Caijing’s sources revealed the job cuts came from the elevated performance pressure and the need for cost reduction.
Earlier this week, Tencen posted the biggest quarterly decline since its Hong Kong listing in 2004, with the worse-than-expected both the top and the bottom line. The management said in the earnings call that they could conduct workforce optimization and the company was required to make the structural change to focus more on more profitable businesses. But executives added that the temporary factors, such as Covid-19 outbreaks, will not become a reason for the optimization. They pointed out the recent bullish news as "clear, supportive" signals from Chinese government, citing a meeting, chaired by China's Vice Premier, vowed to support the development of the tech sector.
A day after the call, Tencent announced on Thursday to streamline and restructure Tencent Sports, dismissing six business teams of the segment as part of OVBU (Online Video Business Unit) under TCG group.