Chinese tech giant ByteDance, which owns the TikTok app, has decided to cut hundreds of jobs at its gaming unit, an informed source told AFP on Monday, reflecting the group’s retreat from the highly competitive video game industry.

“News,” a Beijing-based video game publisher affiliated with Byte Dance, is currently conducting a round of layoffs that will affect “hundreds of people,” the source said.

A Byte Dance spokesperson said in a statement, “We continue to review our business and make changes to focus on areas of long-term strategic growth.” “Following a recent review, we have made the difficult decision to restructure our gaming division.”

The decision to exit the video games industry comes despite Byte Dance’s large investments in Newverse over the past years in an effort to catch up with video games leader Tencent.

A source told AFP that although the sector’s size would decrease significantly, the current cuts did not represent a complete shutdown of the sector.

The source indicated that the staff reductions are aimed at helping ByteDance focus on its core business and streamline its organizational structure, with games not yet launched slated to close in December.

Games with active players, including the popular action game, the source said Atlan’s CrystalThe company will continue its operations as it seeks to diversify assets.

Launched in 2019 in an attempt to challenge Tencent’s dominance, Neoverse failed to achieve the commercial success that Byte Dance had hoped for.

China-based tech giant Tencent dominates the Asian market and is the biggest player in the global video game industry by revenue, investing in game studios around the world.