Meta's big plans for virtual reality and the metaverse have effectively come to an end. According to The Wall Street Journal, Meta has laid off about 1,500 employees (10% of the division) in its Reality Labs division, closed several VR game studios, and suspended major VR-oriented projects. This step is considered a serious reversal after Meta tied its entire corporate identity to the idea of the metaverse in 2021.
Recall that in 2021, Facebook changed its name to Meta and announced that its main social platform of the future would be a VR-based metaverse. This decision was based on the interest of Generation Z in socializing in online games, on the one hand, and on the other hand, it aimed to distance the Facebook brand from the negative image that had arisen against the background of data leaks, disinformation, accusations of monopoly, and Congressional hearings.
According to Meta's plan, users would communicate in a virtual environment through the Horizon Worlds platform, play games with VR headsets, and the metaverse would become a new generation of social networks. However, over time, this vision did not coincide with reality, and metaverse projects faded into the background against the backdrop of the rapid development of artificial intelligence.
According to CNBC, among the studios that suffered or were closed due to layoffs are Armature Studio (Resident Evil 4 VR), Twisted Pixel (Marvel's Deadpool VR), and Sanzaru (Asgard's Wrath). The Supernatural VR fitness app, which was acquired in 2023 for $ 400 million, will no longer produce new content and will only operate in technical support mode. Camouflaj studio, the developer of the VR game “Batman: Arkham Shadow”, was also affected by the layoffs. In addition, The Verge reported that Meta's VR platform for work, Workrooms, was closed.
Earlier, Bloomberg reported that Meta had cut its VR division’s budget by 30% and suspended its program to open up its Meta Horizon operating system, which runs on Quest VR devices, to third-party developers. The reason was that the Reality Labs division had long been making huge financial losses and worrying investors. In total, Meta had invested about $73 billion in this area.
Experts attribute the failure of the metaverse to poor product quality and low user interest. Legless avatars, simple graphics, and meme-like images of Meta CEO Mark Zuckerberg sharing on the metaverse have damaged the project’s image. According to Counterpoint Research, global VR headset shipments in 2024 fell by 12% year-on-year, marking the third consecutive year of decline. Although Meta had a 77% share of the VR market during that period, sales fell short of expectations.
In addition, Meta’s high commission policy of 47.5% applied in the VR ecosystem has caused dissatisfaction among developers. At the same time, problems related to user safety in the metaverse — cases of sexual violence, harassment and stalking — have attracted serious criticism.
Against the background of all these factors, Meta has changed its strategic priorities, focusing on artificial intelligence, smart AR glasses and large language models. The growing interest in Ray-Ban smart glasses is also cited as one of the main reasons for this decision.
