According to a report by The Wall Street Journal, the technology giant laid off about 1,500 employees from Reality Labs, the unit responsible for Meta’s virtual and augmented reality products. The layoffs represent nearly 10 percent of the division’s workforce and include the shutdown of three virtual reality game studios. While Horizon Worlds, Meta’s flagship VR social platform, remains operational, it is reportedly continuing at a reduced scale.
A Meta spokesperson confirmed that the move aligns with the company’s broader shift in priorities. “We said last month that we were shifting some of our investment from Metaverse toward wearables,” the spokesperson said, describing the layoffs as part of that transition.
The cuts mark one of the clearest signals yet that Meta is winding down the metaverse vision that once sat at the core of its corporate identity. In 2021, the company famously rebranded from Facebook to Meta, placing virtual reality and immersive digital worlds at the centre of its long-term strategy. However, the effort has struggled to gain traction with consumers and developers alike.
Reality Labs has been a major financial drag on the company. Reports indicate the division has accumulated losses exceeding $77 billion since its launch in 2020, raising persistent questions from investors about its viability. Industry analysts have described Meta’s pullback from the metaverse as a pragmatic decision, though one that comes later than expected. Even Meta founder and CEO Mark Zuckerberg had begun to downplay the metaverse in earnings calls as early as 2023, as enthusiasm for the concept waned.
While the layoffs are a blow to affected employees—many of whom now face a challenging global tech job market—Meta’s leadership appears focused on redirecting resources toward artificial intelligence and consumer hardware. The company is increasingly betting on AI-powered wearables, including its smart glasses, as the next major growth frontier.
That strategy, however, is not without uncertainty. Meta recently paused international shipments of its AI smart glasses due to inventory constraints, while analysts have warned that strict privacy regulations and an already crowded wearables market could limit demand outside the United States.
Despite these concerns, Bloomberg reported that Meta executives are considering a significant expansion in production. Internal discussions have reportedly explored increasing output from an initial 10 million units to as many as 20 million, with the potential to reach 30 million units by the end of 2026 if market demand proves strong.
As Meta doubles down on artificial intelligence and hardware innovation, the metaverse era that once defined its future ambitions appears to be drawing to a close. Whether AI-powered wearables will deliver the success that virtual reality did not remains an open question, but the company’s strategic direction is now unmistakably clear.