Meta Starts Layoffs as Company Moves Focus From Metaverse to AI Hardware

Meta Shifts Focus, Announces Major Layoffs in Reality Labs

Photographer: David Paul Morris/Bloomberg

Meta Platforms Inc. is set to eliminate over 1,000 positions within its Reality Labs division as part of a strategic move to prioritize artificial intelligence wearables and mobile features over its previous emphasis on virtual reality and metaverse initiatives.

According to an internal message from Chief Technology Officer Andrew Bosworth, employees impacted by these layoffs will begin receiving notifications on Tuesday morning. The reduction will affect about 10% of the Reality Labs workforce, which currently numbers around 15,000.

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Bosworth's memo revealed that Meta is redirecting its metaverse strategy to concentrate on mobile platforms. The company also intends to scale back its virtual reality investments to ensure the division’s long-term viability.

A Meta spokesperson explained, “Last month, we announced a shift in our investment focus from the metaverse to wearable technology. This transition is part of that strategy, and we plan to reinvest the savings to accelerate the growth of our wearables business this year.”

WATCH: Meta Seeks to Increase Ray-Ban AI-Glasses Output, Will Cut Jobs

Reality Labs is responsible for Meta’s hardware and advanced technology projects, such as VR headsets, AI-powered glasses, and virtual environments. However, since 2021, the division has accumulated losses exceeding $70 billion, as many of its ventures have yet to yield significant revenue.

Highlighting Meta’s growing commitment to AI, sources indicate that the company is in talks with EssilorLuxottica SA to potentially double the production of AI-enabled smart glasses by year’s end. Meta is reportedly aiming to boost annual output to at least 20 million units by 2026.

The metaverse, envisioned as a digital space for work, play, and fitness, has proven to be a costly pursuit. Meta invested heavily in developing advanced VR headsets and digital avatars, anticipating fierce competition from other tech giants. However, that rivalry failed to materialize, and the metaverse has not achieved the widespread adoption CEO Mark Zuckerberg anticipated when rebranding Facebook as Meta in 2021.

Meta’s Strategic Realignment and Studio Closures

Meta’s stock fell by 1.9% as of 10 a.m. in New York on Tuesday.

In December, senior leaders discussed reducing the metaverse division’s budget by as much as 30%, reallocating funds to projects like AI glasses. Meta’s collaboration with EssilorLuxottica SA has produced several AI-powered eyewear products under brands such as Ray-Ban and Oakley. Zuckerberg has stated these glasses are outperforming expectations and remain central to expanding Meta’s AI assistant user base.

While Meta will continue to develop metaverse technologies, the focus will shift to mobile devices rather than the immersive VR headsets that were initially prioritized. The Horizon team, responsible for metaverse software, will now concentrate on delivering top Horizon experiences and AI creation tools for mobile users. Bosworth noted, “With a larger potential audience and faster growth on mobile, we are reallocating teams and resources to accelerate adoption in that area.”

Investment in VR headsets and related features will persist, but at a slower pace. Bosworth added, “Starting today, our VR operations will become leaner and more streamlined, with a targeted roadmap to ensure lasting sustainability.”

As part of these changes, Meta is shutting down three of its internal VR game and content studios: Armature (known for bringing Resident Evil 4 to VR), Sanzaru (creators of Asgard’s Wrath and Marvel Powers United), and Twisted Pixel (makers of Deadpool VR and Defector). The VR fitness studio Supernatural will maintain its current offerings but will halt the development of new content and features.

Meta will retain five other content and gaming studios: Beat Games, BigBox, Camouflaj, Glassworks, and OURO.

In an internal note, Tamara Sciamanna, director of Oculus Studios, emphasized, “These adjustments do not signal a departure from gaming. Video games remain at the heart of our ecosystem. We are shifting our focus to supporting third-party developers and partners to ensure the long-term health of our platform.”

Reporting assistance by Daniele Lepido and Antonio Vanuzzo.

(Updated with additional information about Meta’s studio closures.)

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