Meta winds down metaverse business with VR studio closures, job cuts

More than four years after changing its company name from Facebook to Meta, the tech giant is pulling back from its virtual reality projects in a big way.

Meta started cutting jobs this week in its Reality Labs unit, which handles virtual reality work. The layoffs will eliminate more than 1,000 positions, hitting roughly 10% of workers who make Quest VR headsets and run the Horizon Worlds virtual social platform, according to sources with knowledge of the situation. The New York Times first broke the story.

Several game studios working on VR projects are shutting down completely. These include Armature Studio, Twisted Pixel, and Sanzaru, along with a tech team called Oculus Studios Central Technology. Other studios like Ouro Interactive, which Meta started in 2023 to create content for Horizon Worlds, are also seeing staff reductions.

Supernatural, a workout app for VR that Meta bought for $400 million in 2023, has been put on maintenance mode. That means only a small crew will keep it running, with no new features or content coming.

Andrew Bosworth, who serves as Meta’s chief technology officer, plans to meet with all Reality Labs staff on Wednesday.

The job cuts come as Meta pours more money into artificial intelligence, which has become CEO Mark Zuckerberg’s latest priority. As reported by Cryptopolitan previously, the company spent $14.3 billion in June to bring on Alexandr Wang, who started Scale AI, to lead AI strategy. Other engineers and researchers from that startup also joined.

In October, Vishal Shah moved from running metaverse projects for four years to become vice president of AI products. That same month, Meta raised its 2025 spending plans to between $70 billion and $72 billion, with even bigger increases expected in 2026.

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.

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