Meta is reportedly cutting approximately 10% of its workforce in the Reality Labs division, marking another major shift in the company’s long-term strategy as it prioritizes artificial intelligence over metaverse development. According to a report from The New York Times, Reality Labs employs roughly 15,000 people, meaning the layoffs could affect more than 1,000 employees.
Reality Labs is the division responsible for Meta’s virtual reality (VR), mixed reality, and metaverse initiatives, including products under the Oculus and Quest brands. While Meta has invested tens of billions of dollars into the metaverse since rebranding from Facebook in 2021, the division has continued to post significant financial losses, prompting renewed cost-cutting measures.
Further details reported by CNBC indicate that Meta plans to shut down several internal game studios, including Armature Studio, Twisted Pixel, and Sanzaru, as well as a technical unit known as Oculus Studios Central Technology, which was focused on developing VR titles. These closures suggest a pullback from in-house VR gaming content as Meta reassesses where to allocate resources.
Business Insider also reported that Meta CTO and head of Reality Labs Andrew Bosworth described an upcoming January 14 in-person meeting as the “most important” of the year, signaling that further strategic changes may be discussed internally.
Despite the layoffs, The New York Times noted that augmented reality (AR) teams will not be affected. Meta continues to see AR as a critical growth area, particularly in the development of smart glasses, controllers, and next-generation wearable computing. Savings from the Reality Labs job cuts are reportedly being redirected toward AR innovation.
At the same time, Meta is aggressively investing in artificial intelligence. In October, the company moved former metaverse lead Vishal Shah into a leadership role overseeing AI products. Meta also reorganized its internal structure to establish Superintelligence Labs, following the high-profile hiring of Alexandr Wang, former CEO of Scale AI. The company has since offered lucrative compensation packages to attract top AI researchers from rival labs.
Meta has not issued an official statement regarding the reported layoffs. However, the move highlights a broader industry trend, as major tech companies increasingly scale back metaverse ambitions in favor of AI-driven growth and profitability.
As Meta recalibrates its priorities, the future of Reality Labs appears more focused on practical AR applications rather than the expansive virtual worlds once envisioned at the heart of the metaverse.
