Meta has carried out another round of job cuts within its Reality Labs division, reducing the unit’s workforce by roughly 10% and shutting down several in-house virtual reality game studios. The division, which has been at the center of Meta’s ambitious metaverse vision, oversees the development of VR and AR hardware as well as immersive content.
The move reflects a broader recalibration underway at Meta as it reassesses where to deploy capital and talent amid slower-than-expected returns from metaverse investments.
Reality Labs layoffs impact Meta’s VR content strategy
Reality Labs has played a key role in Meta’s long-term bet on virtual worlds, producing everything from Quest VR headsets to exclusive games designed to attract users into its ecosystem. However, the latest layoffs suggest that Meta is pulling back from content-heavy initiatives that require sustained investment with uncertain payoff timelines.
While Meta has not disclosed the exact number of roles affected, reports indicate that the cuts span multiple teams, particularly those focused on game development.
VR Game studios shut down by Meta
The layoffs reportedly include the closure of three established VR game studios: Twisted Pixel Games, Sanzaru Games, and Armature Studio. These studios were responsible for some of the most recognizable titles in Meta’s VR lineup, including Marvel’s Deadpool VRthe Asgard’s Wrath franchise, and the VR adaptation of Resident Evil 4.
News of the shutdowns surfaced after former employees began posting publicly about being laid off. Andy Gentile, a former level designer at Twisted Pixel, was among the first to share the news. Others soon followed, confirming that the studios had been closed as part of internal restructuring.
Employees confirm closures following layoffs
Several former employees from the affected studios have since acknowledged the closures while announcing they are seeking new opportunities. Dan Greenfield, a former senior artist at Twisted Pixel, stated that the studio was shut down due to “strategy changes at Meta.”
At Sanzaru Games, former staff members also confirmed the studio’s closure, noting that multiple Meta-owned VR game teams were shut down on the same day. Similar messages appeared across LinkedIn and other platforms, painting a consistent picture of a coordinated pullback from VR game development.
Meta has not formally announced the shutdown of individual studios.
Why Meta is cutting back on Metaverse projects
Meta says the layoffs are part of a broader effort to reallocate resources. According to company spokesperson Tracy Clayton, Meta is shifting some investment away from metaverse initiatives and redirecting funds toward wearableswhich are expected to be a major growth focus this year.
The decision highlights a change in priorities as Meta looks to concentrate on hardware products with clearer commercial potential, such as smart glasses and mixed-reality devices, rather than costly content creation.
Meta’s Metaverse vision faces reality check
Reality Labs has been a major financial drain for Meta in recent years, reporting multi-billion-dollar losses annually. While CEO Mark Zuckerberg has consistently defended the long-term vision of the metaverse, investor pressure and market conditions appear to be forcing a more disciplined approach.
Shutting down VR game studios suggests Meta may rely more on third-party developers to supply content, rather than funding and operating internal teams.
What this means for Meta and the VR industry
For Meta, the layoffs mark another step in narrowing its metaverse ambitions to areas where it sees clearer returns. For the VR industry, the closures raise questions about the sustainability of large-scale, platform-funded content development.
While Meta remains committed to virtual and augmented reality, the latest cuts signal that the company is entering a more selective phase, one focused less on experimentation and more on efficiency, hardware, and wearables that can reach mass adoption.
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