Meta is slashing 10% of its workforce within the Reality Labs division, the branch central to the company’s ambitious virtual reality and metaverse hardware development. According to reports from The New York Times, these layoffs are expected to impact more than 1,000 employees out of a total division headcount of approximately 15,000.
Strategic Studio Closures and Internal Realignments
The restructuring extends beyond personnel reductions. Reports from CNBC indicate that Meta is shuttering several key gaming and technical studios, including Armature Studio, Twisted Pixel, and Sanzaru. Additionally, the Oculus Studios Central Technology unit, which focused on VR title development, is being dismantled.
Internal tension remains high as the company prepares for a critical all-hands meeting. Business Insider reported that Meta CTO and head of Reality Labs, Andrew Bosworth, scheduled an urgent in-person meeting for January 14 to address the company’s shifting priorities.
Prioritizing Augmented Reality Over VR
Despite the widespread cuts, Meta is not abandoning its hardware ambitions entirely. The layoffs are reportedly concentrated on virtual reality initiatives, while teams focused on augmented reality (AR)—specifically the development of advanced glasses and controllers—remain unaffected. Financial resources saved from these layoffs are being redirected to accelerate the company’s AR roadmap.
The Metaverse Pivot Meets the AI Wave
This downsizing marks a significant shift for Meta, which rebranded in 2021 specifically to dominate the metaverse. The company is now aggressively reallocating capital and talent toward artificial intelligence.
Strategic moves toward AI dominance have been consistent over the past year. In October, Meta shifted metaverse leader Vishal Shah to oversee AI products as a vice president. Furthermore, the company established its “Superintelligence Labs” after recruiting top talent, including Alexandr Wang from Scale AI, and has continued to offer lucrative compensation packages to secure elite researchers from rival organizations.
Meta has not yet provided an official statement regarding the layoffs.