What's happened
Meta is considering budget cuts of up to 30% in its Reality Labs division, affecting virtual reality and metaverse projects. The move aims to reallocate resources toward AI wearables, amid ongoing losses and uncertain consumer adoption of VR technology. Layoffs could begin as early as January.
What's behind the headline?
Meta's decision to cut up to 30% of its Reality Labs workforce signals a strategic pivot away from the unprofitable metaverse ambitions. The company is reallocating funds toward AI wearables, such as smart glasses, which have shown promising sales and user engagement. This shift reflects the broader challenge of turning virtual reality into a mainstream consumer product, as initial adoption remains tepid. The layoffs, if implemented, will likely accelerate Meta's transition from a long-term metaverse vision to a focus on more immediate, profitable hardware innovations. The move also indicates a response to investor scrutiny over the division's mounting losses, with Meta betting on AI and wearable tech to deliver quicker returns.
What the papers say
The Japan Times reports that Meta is considering cuts of up to 30% in its metaverse division, including layoffs as early as January, with resources being redirected toward AI glasses and wearables. The New York Times confirms the potential for layoffs of 10 to 30 percent, emphasizing that the company does not plan to abandon the metaverse but is shifting investment toward AI-enabled wearables, which have recently surpassed sales targets. Business Insider UK highlights that the cuts follow a series of internal restructuring efforts and a strategic meeting at Mark Zuckerberg's Hawaii estate, with the company facing over $60 billion in losses since 2020. All sources agree that Meta's long-term metaverse ambitions are being scaled back in favor of more commercially viable hardware and AI projects, amid ongoing financial losses and consumer hesitance.
How we got here
Meta has heavily invested in the metaverse since rebranding from Facebook in 2021, purchasing Oculus and developing virtual reality hardware and social platforms like Horizon Worlds. Despite technical advances, consumer adoption has been limited, and Reality Labs has accumulated over $70 billion in losses over four years. The company is shifting focus toward AI wearables and smart glasses, which have seen better market performance.
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Reality Labs, formerly known as Oculus, is a business of Meta Platforms that produces virtual reality and augmented reality hardware and software, including virtual reality headsets such as Quest, and metaverse platforms such as Horizon Worlds.