Meta Platforms announced a major strategic shift on January 14, laying off more than 1,000 employees within its Reality Labs division as the company retreats from its metaverse-first vision. The cuts represent a significant downsizing of the division's workforce and signal a decisive pivot toward AI-powered wearables and mobile integration.

Workforce Reduction Details

The layoffs impact approximately 10% of Reality Labs' total workforce, affecting over 1,000 of the division's 15,000 employees. A company spokesperson explained the strategic rationale behind the decision, stating that the move is part of broader efforts to reallocate resources.

"This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year," the spokesperson told Bloomberg, adding that the company had previously indicated this strategic shift in December.

Strategic Pivot from VR to Wearables

The restructuring marks a significant departure from Meta's metaverse-first approach that gained prominence during the pandemic and led to the company's rebranding from Facebook to Meta in October 2021. Reality Labs, created around the same time as the rebrand, has accumulated losses exceeding $70.00 billion since its inception.

According to an internal memo from CTO Andrew Bosworth, Meta aims to become "more sustainable" by pivoting its metaverse investments toward mobile devices while reducing virtual reality expenditures. The company previously announced in December its intention to shift investment focus from metaverse development toward wearables technology.

Gaming Operations Severely Impacted

The restructuring has particularly affected Meta's gaming ambitions, resulting in immediate closures of several VR game studios. The shuttered studios include:

• Armature
• Sanzaru
• Twisted Pixel

While VR fitness app Supernatural will continue supporting its current offering, development of new content and features has been placed on hold. Despite these closures, Tamara Sciamanna, director of Oculus Studios, emphasized gaming's continued importance in an internal memo.

"Gaming remains the cornerstone of our ecosystem. With this change we are shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability," she reportedly wrote.

Previous Workforce Adjustments

This marks the latest in a series of workforce reductions within Reality Labs. In April 2025, the company previously laid off employees working on VR fitness game Supernatural, though specific numbers were not disclosed at that time.

The current restructuring represents Meta's most significant retreat from its ambitious metaverse vision, as the company seeks to balance innovation with financial sustainability while positioning itself in the emerging AI wearables market.

Meta Platforms Inc. has begun cutting more than 1,000 jobs from its Reality Labs division as the company redirects resources from virtual reality and metaverse products toward AI wearables and mobile phone features. The layoffs represent a significant strategic shift for the social media giant, which has invested heavily in futuristic technologies with limited commercial success.

Job Cuts Impact Reality Labs Division

Affected employees received notifications starting Tuesday morning, according to an internal memo from Chief Technology Officer Andrew Bosworth reviewed by Bloomberg News. The cuts are expected to impact roughly 10% of employees within the Reality Labs group.

Strategic Pivot Toward AI Wearables

As part of the reduction, Meta is pivoting its metaverse efforts to focus on mobile devices while cutting back on virtual reality investments to make the business "more sustainable," according to Bosworth's memo. A company spokesperson confirmed the strategic shift, stating: "We said last month that we were shifting some of our investment from metaverse toward wearables. This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year."

Reality Labs houses Meta's hardware and futuristic product development efforts, including VR headsets, AI glasses, and virtual world products. However, the division has accumulated losses exceeding $70.00 billion since the start of 2021, as many investments have yet to generate meaningful revenue.

Metaverse Vision Falls Short of Expectations

The metaverse concept—a virtual world where people can work, play, and exercise—has proven particularly costly for Meta. The company invested heavily in developing high-end VR headsets and digital features like avatars, anticipating intense competition with other technology firms. However, that rivalry never materialized, and the metaverse failed to gain traction as envisioned by CEO Mark Zuckerberg when he renamed Facebook to Meta in 2021.

In December, top executives discussed budget cuts as deep as 30% for the metaverse group, aiming to adjust budgets and redirect funding toward other projects, particularly AI glasses.

Focus on Mobile and AI Partnerships

Meta has partnered with EssilorLuxottica SA to develop AI-powered spectacles under brands like Ray-Ban and Oakley. Zuckerberg has indicated these glasses are performing better than expected and remain central to plans for increasing adoption of Meta's AI assistant.

The company will continue metaverse development but with a mobile-first approach rather than the fully immersive VR headsets originally envisioned. The team building metaverse software experiences, now called Horizon, will "double down on bringing the best Horizon experiences and AI creator tools to mobile," Bosworth wrote, citing the "larger potential user base and fastest growth rate" of mobile platforms.

Leaner VR Operations Moving Forward

While Meta will maintain VR headset investments, the approach will be less aggressive. "Starting today, VR will operate as a leaner, flatter organization with a more focused road map to maximize long-term sustainability," Bosworth stated in his memo.

The restructuring reflects Meta's broader effort to balance ambitious technological investments with financial sustainability as the company adapts to market realities and investor expectations.

Source: https://www.ndtvprofit.com/business/layoffs-meta-begins-job-cuts-as-it-shifts-from-metaverse-to-ai-devices