Tencent has decided to downsize its plans for virtual reality hardware in the metaverse, according to a report by Reuters.

The move resulted in headcount and cost cuts in the metaverse unit, said three anonymous sources familiar with the matter.

The Chinese tech giant previously revealed its intent to produce both software and hardware for the nascent industry, hiring roughly 300 employees for that purpose.

The unit, which launched in June and was called the “extended reality” (XR) division, is not being entirely disbanded, Tencent stated. The need to achieve profitability and the cost of a major investment were cited as reasons for the downsizing.

This move follows a recent wave of retractions by leading tech players from their goals of seizing a share of the virtual worlds market, with Microsoft announcing earlier this year that it would retire some of its VR products as metaverse-adjacent teams bore the brunt of the job cuts.