Meta Slashes 1,000 Jobs in Reality Labs, Shifts Focus from VR to AI in 2026

• Why Is Meta Abandoning Its VR Dreams?
• Is the VR Market Collapsing?
• What’s Next for Meta’s Tech Strategy?
• FAQs: Meta’s Pivot Explained

Meta's dramatic pivot from virtual reality (VR) to artificial intelligence (AI) has sent shockwaves through the tech industry. The company recently cut 1,000 jobs in its Reality Labs division—a 10% reduction—marking a significant retreat from its once-ambitious metaverse vision. This MOVE reflects broader struggles in the VR market, where consumer adoption has lagged behind expectations. Let’s dive into what this means for Meta, developers, and the future of immersive tech.

Why Is Meta Abandoning Its VR Dreams?

Meta’s Reality Labs, the division behind its VR headsets and metaverse projects, has hemorrhaged over $70 billion since late 2020. The recent layoffs primarily hit teams working on the Quest headsets and Horizon Worlds, Meta’s social VR platform. Internal production studios were also shuttered. According to CNBC, this downsizing signals a strategic shift toward wearables (like the Ray-Ban Meta smart glasses) and AI initiatives. Andrew Bosworth, Meta’s CTO, insists the company isn’t quitting VR entirely but admits growth has been slower than anticipated. "We’re still investing heavily, just more prudently," he told Tech Sources. Palmer Luckey, Oculus co-founder, echoed this, noting Meta still employs the largest VR team "by a margin of tenfold."

Is the VR Market Collapsing?

Analysts like Jitesh Ubrani from IDC argue the extended reality (XR) sector—encompassing VR, AR, and smart glasses—is undergoing a painful correction. Despite Meta’s $2 billion bet on Oculus in 2014, VR headsets remain niche, appealing mostly to gaming enthusiasts. "Consumers never embraced bulky headsets for prolonged use," Ubrani said. "The market has spoken." Google’s Owlchemy Labs CEO, Andrew Eiche, criticized the industry’s "strategic blunder" of expecting smartphone-level adoption. He also slammed Meta’s heavy promotion of Horizon Worlds, which stifled third-party developers. "We’re at Meta’s mercy," Eiche admitted. "If they retreat, we all do."

What’s Next for Meta’s Tech Strategy?

Meta’s 2025 Connect conference made its priorities clear: zero new VR hardware debuted, while the $799 Ray-Ban Meta Display glasses took center stage. The company is also sunsetting programs like enterprise VR training tools. Sean Mann of startup RP1 believes Meta missed opportunities by over-indexing on gaming instead of exploring broader VR applications. Meanwhile, content creator Jessica Young laments Meta’s pivot to mobile-focused experiences, akin to Roblox: "The pandemic-era VR version of Horizon Worlds had magic. That’s fading now."

FAQs: Meta’s Pivot Explained

How many jobs did Meta cut in Reality Labs?

Meta eliminated 1,000 positions, roughly 10% of the division’s workforce.

Is Meta completely leaving VR?

No, but investments are being scaled back. The focus is now on wearables and AI.

What’s the financial impact of Reality Labs?

The division has lost over $70 billion since late 2020, per Meta’s financial disclosures.