Meta’s Metaverse Retreat: VR Studio Closures and Job Cuts Signal Strategic Pivot
Meta slashes its metaverse ambitions—shutting VR studios and cutting jobs in a brutal strategic reversal.
The Reality Check Hits
The company once known as Facebook is scaling back its virtual reality operations. Entire development teams are being disbanded. Hardware projects face indefinite delays. The metaverse division—once touted as the future of the internet—is now a cost center undergoing aggressive optimization.
Numbers Don't Lie
While specific figures remain confidential, internal sources confirm 'significant' reductions across multiple VR-focused departments. The cuts follow months of declining user engagement metrics and mounting investor pressure. Reality Labs continues burning cash at an alarming rate—over $10 billion in losses last year alone.
Strategic Implications
This isn't just restructuring—it's a fundamental rethinking of Zuckerberg's grand vision. Meta appears to be hedging its bets, diverting resources toward artificial intelligence and more immediately profitable ventures. The move suggests even tech giants struggle to force-feed adoption of immersive digital environments.
Industry Ripple Effects
VR hardware partners face uncertain futures. Content developers who bet big on Meta's ecosystem now scramble for alternatives. The broader metaverse narrative takes another credibility hit—just as crypto-native virtual worlds were gaining traction with actual users rather than corporate mandates.
The Bottom Line
Meta's retreat reveals the harsh economics of building virtual empires: when quarterly earnings call, even multibillion-dollar fantasies get downsized. The company essentially admitted what crypto natives knew all along—decentralized, community-owned virtual spaces might just outlast corporate-controlled metaverses. After all, you can't lay off DAO members.
Smart glasses find success where VR failed
A Meta representative said the changes follow plans announced in December to MOVE money within Reality Labs from VR projects to AI glasses and wearable technology. “This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year,” the spokesperson stated.
Meta has found better results with AI-powered wearables than VR products. The company partnered with EssilorLuxottica to create Ray-Ban Meta smart glasses. In September, they introduced the Meta Ray-Ban Display glasses for $799, which show small messages and photo previews on a built-in screen. Meta said last week it WOULD postpone the worldwide launch because of “limited” supplies due to “unprecedented” demand in America.
Stefano Grassi, who handles finances at Luxottica, said in October that they expect to hit their goal of making 10 million units sooner than the original end-of-2026 target.
Meta hasn’t completely given up on VR
The company is now trying to get developers who make games for Roblox, a gaming platform with more than 150 million daily users that kids love, to create content for Horizon Worlds instead. Horizon has never attracted more than a few hundred thousand monthly users, even though Zuckerberg highlighted it when he changed the company name.
Last year, Bosworth told the team to make Horizon Worlds successful as a phone app after testing began in 2023. Meta moved workers from other Reality Labs areas to the Horizon Worlds team in 2025.
Ben Hatton, who analyzes connected devices for CCS Insight, explained to CNBC that poor VR headset sales and strong mobile growth forced Meta’s direction. “It kind of follows that Meta will be moving it towards mobile as mobile gaming has become very popular over the last five years or so,” Hatton noted.
Meta bought Oculus VR for $2 billion twelve years ago to enter this market. Since late 2020, Reality Labs has lost more than $70 billion total. In October’s earnings report, Meta revealed Reality Labs lost $4.4 billion while making only $470 million in sales.
Horizon Worlds has struggled from the beginning. In August 2022, Zuckerberg posted a picture of his avatar NEAR the Eiffel Tower and a Spanish church. People mocked the poor graphics online. Days later, he shared a better-looking avatar and promised improvements were coming.
If you're reading this, you’re already ahead. Stay there with our newsletter.
