Meta Cuts Over 1,000 VR Jobs, Shuts Down Studios And Redirects Billions To AI And Smart Glasses

More than four years after rebranding from Facebook to Meta, the tech giant is scaling back its virtual reality ambitions. The company has laid off over 1,000 employees in its Reality Labs division, representing roughly 10% of the workforce involved in developing Quest VR headsets and the Horizon Worlds virtual platform.

Game Studios Shut Down, VR Fitness App Frozen Several VR content studios have been completely shut down, including Armature Studio, Twisted Pixel, Sanzaru, and the Oculus Studios Central Technology team. Ouro Interactive, created by Meta in 2023 to support Horizon Worlds, has also seen staff reductions. Meta is also downgrading Supernatural, its VR fitness app acquired in 2023 for $400 million. It’s now in “maintenance mode” – still running, but with no new updates or content. Meta CTO Andrew Bosworth is scheduled to address all Reality Labs employees on Wednesday regarding the future direction.

Zuckerberg Shifts Billions From Metaverse To AI These changes come as Meta significantly increases its investments in artificial intelligence — Zuckerberg’s new top priority. In June, the company invested $14.3 billion to bring on Alexander Wang (founder of Scale AI) and several top AI engineers. In October, Meta moved metaverse division head Vishal Shah to lead AI product development. That same month, the company raised its 2025 budget to $70–72 billion, with even larger increases planned for 2026.

Smart Glasses Succeed Where VR Failed A Meta spokesperson said the changes fulfill plans announced in December — reallocating funds within Reality Labs from VR to AI-powered glasses and wearable devices. These have delivered stronger results than VR products. Meta partnered with EssilorLuxottica to create Ray-Ban Meta smart glasses. In September, it launched Meta Ray-Ban Display glasses, featuring a screen for message previews and notifications, priced at $799. Due to “unprecedented demand” in the U.S., the global launch was delayed. Luxottica stated it expects to hit its production goal of 10 million units earlier than the original end-of-2026 target.

Horizon Worlds Moves To Mobile Meta hasn’t abandoned VR entirely but is shifting toward mobile. The company is trying to attract developers from Roblox (with over 150 million daily users) to build content for Horizon Worlds, which has struggled to attract more than a few hundred thousand monthly users. In 2023, Meta began testing Horizon Worlds on phones. In 2025, employees from other Reality Labs teams were reassigned to help grow the mobile version. Analysts say the shift reflects weak VR headset sales and the booming mobile gaming market. Meta acquired Oculus VR in 2014 for $2 billion, hoping to dominate the VR space. But since late 2020, Reality Labs has racked up over $70 billion in losses. In its Q3 2025 earnings, Meta reported a $4.4 billion loss for Reality Labs — with only $470 million in revenue.

Horizon Still Struggles With Graphics And Growth Horizon Worlds has struggled since its launch. In August 2022, Zuckerberg shared an image of his avatar near the Eiffel Tower. The low-quality graphics triggered online mockery. Days later, he posted a better-looking avatar and promised improvements were on the way.

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