Meta is closing 3 VR studios and laying off roughly 10% of Reality Labs as it shifts focus from the metaverse to AI wearables, it's next sure-fire, can't-miss idea

Meta chief technology officer Andrew "Boz" Bosworth said early in 2025 that the metaverse could be a "legendary misadventure" if the company's Reality Labs division didn't turn things around that year in a big way. Well, here we are in 2026, and it looks like the mission was not accomplished: Bloomberg says Meta is beginning layoffs of more than 1,000 Reality Labs employees and closing three development studios as it shifts attention from VR and the metaverse to its next big idea, AI wearables and phone features.

An internal memo viewed by Bloomberg said roughly 10% of the Reality Labs workforce will be let go in an effort to make the division "more sustainable." A Meta representative said the cuts represent part of a previously announced effort to shift investment "from metaverse toward wearables," adding, "We plan to reinvest the savings to support the growth of wearables this year."

"Starting today, VR will operate as a leaner, flatter organization with a more focused road map to maximize long-term sustainability," Bosworth wrote in the memo.

Reality Labs has lost a staggering amount of money over the past several years—roughly $50 billion across 2020-2024, a revenue black hole that's only grown wider since—without showing any evidence of an ability to produce a popular, actual useful mainstream product. Which isn't to say that the metaverse didn't give us anything memorable, just that it was, well, this:

Meta will continue to work on the metaverse, according to the report, but with a focus on mobile devices rather than "fully immersive VR headsets" that were initially expected to be at the core of the experience. VR headset development will also continue, but at a reduced pace.

Meta will also close three VR development studios as part of the cuts: Resident Evil 4 VR developer Armature Studios, Asgard's Wrath maker Sanzaru Games, and probably the best known of the bunch, Defector developer Twisted Pixel, whose last release was Deadpool VR in 2025.

PC Gamer senior editor Wes Fenlon said all the way back in 2021 that the metaverse is bullshit and he sure wasn't wrong. A potential difficulty for Meta is that its wearables gambit risks wandering into the same minefield: $799 for a pair of glasses that look ridiculous and rely on having Meta's AI installed on your phone for functionality, a dodgy proposition in its own right. (And even when they do work, is this really the future we want?) On top of that comes the extremely obvious privacy concerns these things inevitably engender, and the potential legal headaches and lawsuits that may follow. It's possible that AI wearables will become mainstream someday, but someday soon? I wouldn't bet on it—but I also wouldn't have sunk more than $50 billion into whatever the hell the metaverse was supposed to be.