"Alibaba Group" has reduced its workforce within its metaverse unit, Yuanjing, as the company scales down operations in the sector, according to sources.

Per a report published by the "South China Morning Post", the restructuring, which reportedly affected dozens of employees, aims to enhance efficiency within the unit, reflecting a shift in focus from the highly-hyped metaverse market towards other priorities.

Yuanjing, Alibaba's metaverse division, wasestablishedin2021 during a surge of interest in virtual worlds, which prompted several Chinese tech giants to explore the potential of the metaverse.

Despite receiving significant investment, Yuanjing is now slimming down its team in both Shanghai and Hangzhou, Zhejiang’s capital city, following similar moves by other major tech companies.

A source noted that Yuanjing will maintain operations with an emphasis on developing metaverse applications and offering related services.

This decision aligns with broader industry trends as firms redirect resources towards artificial intelligence (AI) technologies, which are gaining momentum.

Similarly, "Disney" last year eliminated its "Next Generation Storytelling and Consumer Experiences" team, originally tasked with exploring metaverse possibilities, as part of larger layoffs impacting 7,000 employees.

AR, VR, and mixed reality tools were seen as potential gateways to the metaverse, yet interest in this sector has cooled ,pushing tech giants to reevaluate their investments.