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

• Why Did Meta Lay Off 1,000 Reality Labs Employees?
• Is Meta Abandoning the Metaverse?
• What’s Next for the VR Industry?
• How Are Creators Reacting?
• FAQ

Meta has laid off 1,000 employees from its Reality Labs division, marking a 10% reduction in its workforce. The cuts primarily affect teams working on VR headsets like the Quest and the social VR platform Horizon Worlds. This MOVE signals a strategic pivot toward AI and wearable tech, such as the Ray-Ban Meta smart glasses. Analysts note that the VR market has struggled to gain mainstream adoption, with Meta’s Reality Labs accumulating over $70 billion in losses since 2020. The company insists it remains committed to VR but acknowledges slower-than-expected growth. Industry experts argue Meta’s early hype around the "metaverse" may have been premature, as the technology remains niche.

Why Did Meta Lay Off 1,000 Reality Labs Employees?

Meta confirmed last week that it eliminated roughly 1,000 positions at Reality Labs, its division dedicated to virtual and augmented reality. The layoffs represent a 10% reduction in the unit’s workforce, according to internal reports. Teams developing the Quest VR headset and Horizon Worlds, Meta’s social VR platform, were hit hardest. The company also shut down several in-house production studios. This decision reflects a broader shift in priorities—Meta is now doubling down on artificial intelligence and wearable devices like its Ray-Ban Meta smart glasses, a collaboration with EssilorLuxottica.

Is Meta Abandoning the Metaverse?

Not entirely, but the vision has clearly lost momentum. When CEO Mark Zuckerberg rebranded Facebook as Meta in 2021, he pitched the metaverse as the future of digital interaction. Reality Labs, however, has hemorrhaged money—over $70 billion in losses since late 2020. At Meta’s 2025 Connect conference, the absence of new VR hardware was conspicuous. Instead, the company showcased its Ray-Ban smart glasses with built-in displays. Andrew Bosworth, Meta’s CTO, insists VR remains a priority but admits adoption has lagged expectations. "We’re still investing heavily, but growth is slower than projected," he told reporters.

What’s Next for the VR Industry?

The market is at a crossroads. Analysts like Jitesh Ubrani from IDC argue VR headsets have largely failed to move beyond gaming enthusiasts. "The public isn’t keen on strapping bulky devices to their faces," Ubrani noted. Meta’s pullback could Ripple across the industry. For instance, Owlchemy Labs’ Andrew Eiche criticized Meta’s aggressive Horizon Worlds push, saying it overshadowed third-party developers. Meanwhile, RP1’s Sean Mann believes Meta missed opportunities by focusing too narrowly on gaming instead of broader VR applications like employee training.

How Are Creators Reacting?

Jessica Young, a Horizon Worlds content creator, described the shift as a "VR winter." She plans to keep building for the platform but worries Meta’s rumored pivot to a mobile-friendly, Roblox-like model could dilute its unique appeal. "If Meta doesn’t release a new headset soon, interest will wane," Young said. Palmer Luckey, Oculus’ co-founder, countered that Meta still boasts the largest VR team globally. Yet, with layoffs and studio closures, the message is clear: Meta is hedging its bets.

FAQ

How many jobs did Meta cut at Reality Labs?

Meta eliminated approximately 1,000 positions, or 10% of Reality Labs’ workforce.

Is Meta giving up on VR?

No, but the company is reallocating resources toward AI and wearables due to slower VR adoption.

What products is Meta prioritizing now?

Meta is focusing on its Ray-Ban smart glasses and AI initiatives, though it maintains some VR development.