Meta is pulling back sharply from the virtual reality push that once defined its future, cutting more than 1,000 jobs and closing several VR game studios as it redirects money and talent toward artificial intelligence and wearable technology.
The layoffs, confirmed this week, affect roughly 10 percent of Meta’s Reality Labs hardware unit, which develops Quest headsets and the Horizon Worlds virtual platform. According to people familiar with the matter, studios being shut down include Armature Studio, Twisted Pixel, Sanzaru and a technical group known as Oculus Studios Central Technology. Additional job cuts are hitting other teams, including Ouro Interactive, which builds content for Horizon Worlds.
Meta Chief Technology Officer Andrew Bosworth is expected to address employees in an all hands meeting on Wednesday.
The retrenchment marks a significant shift from the strategy Mark Zuckerberg laid out just over four years ago when Facebook rebranded as Meta, signaling a bet that work, entertainment and social life would increasingly move into immersive virtual spaces. Instead, the company is now channeling its resources into artificial intelligence, an area Zuckerberg has embraced aggressively.
In June, Meta spent $14.3 billion to bring in Scale AI founder Alexandr Wang to lead AI strategy, along with other engineers and researchers. In October, Vishal Shah, who previously oversaw metaverse efforts, became vice president of AI products. Meta also raised its projected 2025 capital spending to between $70 billion and $72 billion, with even larger increases expected in 2026.
“This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year,” a Meta spokesperson said, declining to comment directly on the layoffs.
While virtual reality has struggled to gain mass adoption, Meta has found more traction with AI powered wearables. Its partnership with EssilorLuxottica on Ray Ban Meta smart glasses has produced stronger demand. The companies unveiled display enabled glasses priced at $799 last year, though Meta recently delayed a wider global rollout due to limited supply and high US demand. Luxottica executives have said production capacity could reach 10 million units sooner than planned.
Despite the cuts, Meta is not abandoning VR entirely. The company is reshaping Horizon Worlds to resemble platforms like Roblox and Minecraft, aiming to attract younger users and mobile gamers. Horizon Worlds has never exceeded a few hundred thousand monthly active users, far below Roblox, which reports more than 150 million daily users.
Meta has encouraged developers to build simpler, kid friendly games and has shifted Horizon Worlds toward mobile access. In February, the company launched a $50 million Creator Fund to boost content creation, with an emphasis on mobile experiences and easier access through Facebook and Instagram.
The pullback comes after years of heavy losses. Since late 2020, Reality Labs has accumulated more than $70 billion in losses. In its most recent quarterly report, the division posted a $4.4 billion loss on $470 million in revenue.
Analysts say the move reflects broader industry realities. VR hardware adoption has lagged, while mobile and AI driven products continue to grow.
“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,” said Ben Hatton of CCS Insight.
For Meta, the latest changes underscore a clear pivot away from the metaverse dream that once defined the company, toward an AI focused strategy it hopes will deliver results sooner and at greater scale.
