Meta guts a tenth of Reality Labs as the metaverse loses to AI

Meta has begun laying off staff working on virtual reality in its Reality Labs division and is closing several of its game studios. CNBC confirmed that the cuts amount to more than 1,000 jobs, about 10% of the division that makes Quest headsets and the Horizon Worlds social network. The studios closing include Armature Studio, Twisted Pixel and Sanzaru, along with a technical unit called Oculus Studios Central Technology. Supernatural, the VR fitness app Meta bought for $400 million in 2023, has been moved into maintenance mode. A Meta spokesperson said the changes are part of a shift in Reality Labs' budget away from VR and toward AI glasses and wearables: "This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year." The retreat comes as the company pours money into artificial intelligence, including $14.3 billion to bring in Scale AI founder Alexandr Wang, and after it raised its 2025 capital spending range to between $70 billion and $72 billion. Reality Labs has lost more than $70 billion since late 2020. These are jobs lost to a change of strategy: the money is moving to AI, and nothing in the announcement says AI is doing the work.