Meta Platforms has begun laying off more than 1,000 employees within its Reality Labs division – approximately 10% of the group’s workforce. The move signals a major strategic redirection, as the company shifts resources away from traditional virtual reality (VR) and metaverse products to focus on AI-powered wearables and mobile features.
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In an internal memo reviewed by Bloomberg, Chief Technology Officer Andrew Bosworth stated that the layoffs are part of an effort to make the business “more sustainable.” Since 2021, Reality Labs has recorded staggering losses exceeding $70 billion, with many futuristic investments failing to generate meaningful revenue.
The restructuring underscores a significant cooling of Mark Zuckerberg’s original “metaverse” vision. While Meta remains committed to the concept, the focus is shifting from fully immersive VR headsets to mobile devices. The company’s virtual world platform, Horizon, will now prioritize mobile adoption and AI creator tools to reach a larger, faster-growing user base.
Conversely, Meta’s AI-powered smart glasses—developed in partnership with EssilorLuxottica SA (Ray-Ban and Oakley)—have performed better than expected. To capitalize on this momentum:
- Meta is discussing doubling production capacity for AI glasses by the end of this year.
- The company aims to reach an annual capacity of 20 million units or more by the end of 2026.
- Savings from the Reality Labs cuts will be directly reinvested into the growth of the wearables category.
As Reality Labs transition into a “leaner, flatter organization,” Meta is significantly reducing its in-house VR content development. A separate memo from Tamara Sciamanna, director of Oculus Studios, confirmed the closure of three prominent in-house VR game studios:
- Armature: Known for the VR port of Resident Evil 4.
- Sanzaru: Creators of Asgard’s Wrath.
- Twisted Pixel: Developers of Deadpool VR.
Additionally, the popular VR fitness app Supernatural will stop developing new content and features, though it will continue to support its existing product. Despite these closures, Meta maintains five other internal studios and insists that gaming remains a cornerstone of its ecosystem. However, the strategy has shifted toward supporting third-party developers rather than expensive internal production.
The pivot follows high-level budget discussions in December, where executives considered cuts as deep as 30% for the metaverse group. Following Tuesday’s announcement, Meta shares were down 1.9% in early New York trading.
By narrowing its roadmap and doubling down on AI-integrated hardware that users can wear in daily life, Meta hopes to finally turn its “Reality Labs” deficit into a sustainable, revenue-generating pillar of the company’s future.
