Valve lays off 13 employees, reportedly slashing VR hardware division

Gaming company Valve confirmed that it has laid off several full-time employees and contractors, possibly from its virtual reality hardware team. “Last month, 13 full time employees were let go and a portion of our contractor agreements were terminated. It’s an unfortunate part of business, but does not represent any major changes at the company. We thank those affected for their contribution and wish them well in future endeavors,” spokesperson Doug Lombardi told The Verge.

Valve didn’t confirm where the former employees worked, but Reddit user 2flock posted a message, which is apparently from an anonymous Valve employee. “They fired like half the Valve hardware team recently … Wonder how long it’ll be until the remainder get the Jerry treatment,” it reads — possibly a misspelled reference to Jeri Ellsworth, the veteran Valve hardware designer who was fired in 2013 after Valve decided it wanted to focus on VR instead of the AR headset she’d been championing. Valve’s only known hardware projects are VR devices and the aging Steam Controller; it discontinued the Steam Link box last year.

2flock was the source of another Valve VR-related leak last year, posting photos of an apparent Valve prototype headset. So while we can’t confirm whether this is a real message, it’s relatively credible. This morning, former Valve VR team member Nat Brown tweeted that he was no longer working for the company. Variety reported that layoffs hit members of the VR team, although it didn’t offer details.

Alongside its work on the Steam storefront and games like Dota 2, Valve has been a driving force in virtual reality. The company created the widely used SteamVR software platform, and it co-developed the groundbreaking HTC Vive headset, which launched in 2016. Last year, Valve started shipping a second-generation “Knuckles” Vive controller to developers, and as recently as November, there were rumors that it was designing a new headset alongside a VR prequel to Half-Life.

Valve has stepped back from the Vive, however, handing development mostly over to HTC. While it was originally supposed to partner with other manufacturers on SteamVR products, an LG-made headset never materialized. Several VR and AR companies have either laid off employees or shut down amid a market that’s growing slower than many people expected.

Variety reports that layoffs don’t mean that Valve is exiting VR, but it’s not clear whether that’s explicitly confirmed or simply implied from the promise that there weren’t “any major changes at the company.” It’s also possible that Valve could continue to work on SteamVR software but bow out of the hardware market. On the bright side, the Knuckles drivers were updated last month, and Valve is advertising a job listing for a “VR and hardware” software engineer. Also, Oculus and HTC have both announced new headsets for 2019. So if Valve is still working on VR hardware, we might also hear about it this year.