Meta confirms over 1,000 job cuts as 3 VR studios shut down

It is no more a speculation. Meta has officially confirmed that it is laying off over 1,000 employees from its Reality Labs division.

Calling it a restructuring, the company has also announced shutting down three virtual reality (VR) studios and scaling back projects that once stood at the core of its futuristic vision.

The layoffs signal a dramatic shift for Meta as it moves away from the costly pursuit of the metaverse toward artificial intelligence (AI) and wearable devices, technologies that CEO Mark Zuckerberg now sees as the company’s best bet for growth.

Metaverse meltdown

As first reported by Bloomberg, Meta has begun a sweeping round of layoffs affecting its VR-focused Reality Labs unit. The move impacts roughly 10 per cent of the hardware division, which oversees Quest headsets and the Horizon Worlds virtual platform.

Among the most notable casualties are three prominent VR game studios: Sanzaru Games, Twisted Pixel, and Armature Studio, all of which have now been shut down.

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A technical team known as Oculus Studios Central Technology has also been dissolved, while smaller units such as Ouro Interactive and the Supernatural fitness app team are being pared back.

Supernatural, which Meta acquired in 2023 for a reported $400 million, has been relegated to “maintenance mode”, meaning it will run on a skeleton staff and receive no new content updates. Ouro Interactive, another internal studio launched in 2023 to build games for Horizon Worlds, has reportedly been hit by staff reductions as well.

The news was delivered in an internal memo from Andrew Bosworth, Meta’s chief technology officer, who told employees that the company was “refocusing” its efforts.

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In an all-hands meeting scheduled for Wednesday, Bosworth is expected to outline Meta’s new direction, one where VR plays a smaller role in favour of mixed reality and AI-powered devices like the Ray-Ban smart glasses.

AI over the metaverse

Meta’s pivot reflects a broader shift in Silicon Valley. Once obsessed with building immersive virtual worlds, major tech firms are now funnelling their resources into AI, the technology that’s driving everything from productivity tools to generative assistants. Zuckerberg, too, appears to have joined the AI arms race with gusto.

In June, Meta reportedly spent a staggering $14.3 billion to bring in Alexandr Wang, the founder of Scale AI, who now heads the company’s AI strategy.

Dozens of top engineers and researchers from the startup have also joined Meta’s ranks, signalling an all-out push to catch up with competitors like OpenAI, Google, and Anthropic.

The leadership reshuffle underscores this new priority. Vishal Shah, who previously led Meta’s metaverse division for four years, was appointed vice president of AI products in October. The same month, the company raised its 2025 capital expenditure forecast to between $70 billion and $72 billion, with “notably larger” spending expected in 2026, much of it earmarked for AI infrastructure and computing power.

While Meta insists it isn’t abandoning the metaverse entirely, the layoffs and closures mark a sobering chapter for its VR ambitions. Once a symbol of Zuckerberg’s futuristic aspirations, Reality Labs is now being restructured around more immediate, tangible technologies.

For over 1,000 employees, however, the metaverse dream has abruptly ended, replaced by an uncertain future in an industry rapidly reshaped by artificial intelligence.