In an unexpected turn, TikTok's parent company, ByteDance Ltd. is preparing to bid farewell to the gaming industry by shutting down its principal brand, Nuverse, and eliminating hundreds of jobs. This decision puts its competitor, Tencent Holdings Ltd., in a more advantageous position.

What Happened: As reported by Bloomberg, ByteDance's plan involves terminating several hundred employees, discontinuing ongoing projects, and potentially selling existing titles. The Chinese tech giant, recognized for its popular short video platforms TikTok and Douyin, is expected to announce this decision on Monday.

This withdrawal represents ByteDance's most significant retreat from the booming gaming industry, a domain primarily controlled by Tencent and its smaller rival, NetEase Inc. ByteDance has gradually reduced its gaming operations after struggling to capture a substantial market share from Tencent.

Reports also suggest that ByteDance is contemplating the sale of Shanghai Moonton Technology Co., a leading studio it acquired for $4 billion in 2021. Reuters formerly reported the decision to discontinue Nuverse, but a ByteDance spokesperson has yet to confirm these claims.

Why It Matters: Despite ByteDance's persistent efforts, the gaming sector remains firmly in Tencent's hands. The company has established an extensive content library in China and internationally through acquisitions and generates substantial user traffic through its comprehensive messaging service, WeChat.

ByteDance announced its entry into the gaming scene in November 2022 with ambitions to replicate its success in the mobile video market. However, the company's retiring its gaming signifies its struggle to compete against established players like Tencent. In July 2023, Tencent acquired Techland Studio, a Polish game development studio known for creating the original Dead Island and the Dying Light series, thus furthering its market position.