Meta cuts over 1000 jobs in Reality Labs as focus shifts from VR to AI

Meta has begun laying off employees working on virtual reality and is shutting down several VR studios within its Reality Labs division, according to people familiar with the matter.

The layoffs, which affect more than 1,000 jobs, will impact about 10% of Meta’s hardware division, including teams working on Quest VR headsets and the Horizon Worlds virtual social platform, according to a CNBC report.

Meta Chief Technology Officer Andrew Bosworth is expected to hold an all-hands meeting with Reality Labs employees on Wednesday.

The moves signal a scaling back of Meta’s metaverse ambitions as the company increases investment in artificial intelligence. Chief Executive Mark Zuckerberg has prioritised AI in recent years, including spending $14.3 billion in June to bring in Scale AI founder Alexandr Wang, who now leads Meta’s AI strategy, along with other engineers and researchers from the startup.

In October, Vishal Shah, who led Meta’s metaverse efforts for four years, was appointed Vice President of AI products. That same month, the company raised its projected capital expenditures for 2025 to between $70 billion and $72 billion and said spending growth would be ‘notably larger’ in 2026.

Studios being shut down include Armature Studio, Twisted Pixel and Sanzaru, as well as a technical unit known as Oculus Studios Central Technology. Job cuts are also affecting other teams, including Ouro Interactive, which Meta launched in 2023 to build original content for Horizon Worlds.

Supernatural, a VR fitness app Meta acquired for $400 million in 2023, has been moved into maintenance mode, meaning it will operate with a small team and no longer receive new content, according to the report.

The company signalled the changes in December, when it said it would redirect parts of Reality Labs’ budget away from VR and toward AI glasses and wearable devices.

Despite the cuts, Meta is not exiting VR entirely. The company is encouraging developers who build games for Roblox to create experiences for Horizon Worlds. Roblox reports more than 150 million daily users, while Horizon Worlds has not exceeded a few hundred thousand monthly active users.

Meta has also sought to broaden Horizon Worlds’ reach. Last year, Bosworth directed teams to develop it into a successful smartphone app following tests of a mobile version in 2023. In 2025, employees from other Reality Labs units were reassigned to the Horizon Worlds team, the former employees said, as per the media report.