Meta Plans Deep Cuts to Metaverse Division as VR Bet Continues to Shrink
Meta is preparing significant reductions to its metaverse efforts, with Horizon Worlds and the Quest hardware group facing layoffs as the company pulls back further from its once-ambitious virtual reality strategy, Bloomberg reported, citing people familiar with the discussions.
Executives are reportedly evaluating budget cuts of up to 30% for the metaverse division in 2026. The group — which includes Horizon Worlds and Meta’s Quest headset line — would see staff reductions as part of the restructuring, according to the report.
CEO Mark Zuckerberg has asked all departments to identify savings of around 10%, a request that has become standard in recent budget cycles. But the metaverse unit was instructed to make deeper cuts, in part because the broader tech industry has not adopted VR and virtual worlds as quickly as Meta anticipated.
The largest reductions are expected to hit the virtual reality hardware team, which accounts for the bulk of the division’s spending. Horizon Worlds is also expected to face funding and workforce cuts.
Meta shares rose 4% on Thursday following the news and are up more than 10% so far this year.
The metaverse concept — a network of virtual spaces where users interact through digital avatars, often via VR headsets — once captivated Silicon Valley. Companies raced to acquire digital land, build VR experiences, and invest in immersive internet technologies. Meta went further than anyone, rebranding from Facebook to Meta in 2021 and committing tens of billions of dollars to what Zuckerberg called the next era of computing.
But adoption failed to match expectations. The tech sector shifted its focus toward spatial computing and artificial intelligence: Apple launched the Vision Pro, Microsoft scaled back mixed-reality initiatives, and AI became the dominant investment theme.
Reality Labs, the Meta division housing its metaverse and VR initiatives, has accumulated more than $70 billion in losses since early 2021, Bloomberg reported.
