Pico is pivoting away from its previous strategy in what looks like a soft admission that its plan to take on Meta on its own turf was as audacious as it was unrealistic.
The last few weeks have not been kind to Pico users. First, a rumor circulated that the ByteDance-owned VR player was shutting down. While that was quickly debunked, another story emerged shortly after, that Pico was planning m
assive cuts to its staff. Reuters reported that the layoffs mostly affected Pico’s sales, videos, and platform teams and the number of affected employees was in “hundreds.”
To make Pico fans even more miserable, Blitz Rhythm — a long-awaited Beat Saber competitor — was canceled and the team behind it laid off. Similarly, Ubisoft’s Just Dance, which was supposed to be a Pico 4 exclusive, is now being finished “with another partner.” Adding to these developments, it has been confirmed, that ByteDance is canceling the Pico 5.
All of this adds up to a pretty gloomy picture. There seems to be a change in Pico’s attitude towards VR, and on top of that, there’s a feeling of uncertainty surrounding the company. For example, Oliver Wöhler of Bytedance promised that at the European AWE2023 Expo in Vienna Pico was “planning to show some great news about our roadmap 2023 and 2024,” but when November came, he was nowhere to be seen. Instead of promised announcements, journalists were greeted with muted statements and invite-only presentations. As a result, rumors not only didn’t disappear but instead grew.
At the same time, Pico Interactive made it more than clear that they are not planning to leave the VR market. In a statement sent to China’s Financial Associated Press, they stated that “PICO is operating normally and the company will invest in XR business in the long term.” Similarly, UploadVR received a statement reiterating that “PICO will continue to invest in hardware, core technologies, and enhance the user experience of current and new consumers.”
If, according to Pico, everything is fine and good, then why is there so much doubt and drama then? The reasons are many, but it mostly boils down to inflated predictions and unrealistic expectations.
Pico Interactive was bought by Bytedance for $600 million with the plan to not only challenge Meta, but perhaps even win against it, making Pico the dominant player and Pico Store the dominant platform. Anyone who has followed XR for a while would know this sounds like a very wild aspiration, one that would need to be backed not just with good hardware but also with large sums of money and long-term persistence.
Perhaps Bytedance executives simply assumed that the market was still nascent enough to warrant such optimism. After all, their headset — the Pico 4 — boasts significantly better specs than the Quest 2. It has higher resolution, nice pancake lenses, more RAM, and so on. Technically, it seemed to dominate in every key area. One can almost imagine Zhang Yiming, the CEO of Bytedance, thinking “We have a better product than Meta, so why would anyone choose Quest?”.
But paper specs do not tell the whole story. Even if the VR market is indeed very young, Meta (and before that Oculus) enjoyed a massive head start. The breadth of content on Quest and the amount of games, movies, and experiences available are simply staggering. Any company planning on releasing a standalone system will find it very difficult to compete in that respect, and even if they do create a compelling selection, it still will be difficult for players to forfeit their existing Meta libraries and move to a rival ecosystem, especially when Meta has accumulated a large number of recognizable exclusives and first-party titles. Pico and Quest did not appear on the market at the same time or in similar circumstances. As a result, any hopes for a big system competition, similar to the Xbox versus Playstation scenario, were flawed right from the start regardless of how good the Pico 4 was going to turn out to be.
Combine that with Pico’s difficulties entering the American market (with the rollout first delayed and then apparently canceled) and we can see why Pico’s sales estimates were never truly feasible. In fact, the reported numbers suggested Bytedance hoped to sell between 1 million to 2.5 million headsets. That seems unbelievably bullish, considering Quest 2, a titan in its field, has reportedly sold between 15 to 18 million headsets worldwide. Perhaps such an optimistic figure was due to expected sales in China, where the Quest brand remains unavailable but it’s hard to speculate (speaking of which, in another blow to Pico, Meta signed a deal with Tencent that will bring a rebranded version of Quest 2 to Chinese markets).
Now that Bytedance has received a harsh reality check, they are scaling down the operation, canceling exclusives, and restructuring the existing division. This is causing parts of the internet to assume that Pico is in some kind of self-destruct mode, with a complete shutdown practically imminent. However, from the average user’s perspective, Pico seems to be operating as normal. The company just had a big Black Friday event, offering their headset bundled with three free games starting from £259/€330 along with plenty of other discounts. New games are being added all the time including the latest examples like VRChat and the YouTube App.
Anyone familiar with Stadia or any other big product shutdown will recognize that the Pico 4 store does not exactly look like a business that’s winding down. Can Bytedance both lay off most of its staff, remove exclusive titles, and still claim they are committed to VR? While seemingly contradictory, both claims are entirely possible if we look at their current strategy not in terms of abandonment but as more of a soft admission of defeat.
Pico Interactive’s defeat
The admission in the form of a pivot seems to be a pragmatic acknowledgment of the current market dynamics, where Meta’s dominance is evident. Rather than continuing to fight a losing battle with exclusive titles, Pico is choosing to secure its customers’ demands by ensuring store parity, making sure players have access to the wide range of popular games that already exist on the Meta Store. This comes from developers who have been approached by Pico, including Andre Elijah, whose fitness game was at that time under a one-year contract with Meta, which means it would likely not get released on Pico before 2025. This indicates that Pico, at the very least, is still actively planning to release games one year from now.
Contrary to popular belief, Pico actually had some prior experiences with exclusive titles. They managed to secure an exclusive Calvin Harris experience by WaveXR and had a timed exclusive deal for Galactic Catch by Baobab Studios. However, these titles did little to boost hardware sales. Galactic Catch went largely unnoticed and at the time of its release had less than a couple reviews, indicating that exclusive content was not a strong enough selling point. In fact, it’s hard to imagine even the best, most polished AAA game would make a significant dent in terms of market share and player preferences and Bytedance’s decisions reflect that reality.
The change in strategy seems like a tactical realignment intended to buy the company time. Instead of abandoning the VR market altogether, Pico can adapt its approach, take a step back, and keep evaluating the industry while at the same time remaining somewhat relevant as it continues to move forward.
Whether Pico’s pivot will turn out to be a sustainable path for the future or just temporary life-support remains to be seen.
Mat Pawluczuk is an XR/VR writer and content creator. As with all AR Insider contributors, his opinions are his own.