As anticipated, Meta has started laying off over 1,000 employees from its Reality Labs division, the unit responsible for developing virtual reality (VR) and metaverse products, according to a report by Bloomberg. The restructuring marks a significant pivot in Meta’s long-term strategy, as the company plans to refocus on wearable technology, including its recently launched AI-powered Ray-Ban smart glasses, based on an internal memo from CTO Andrew Bosworth.
Why the Layoffs Were Expected
The decision comes after Reality Labs posted staggering losses of more than $70 billion since early 2021. Despite Meta’s success in delivering popular consumer VR headsets and smart glasses, the division has failed to achieve profitability at a scale that justifies its massive investment.
This development underscores the challenges facing Mark Zuckerberg’s metaverse vision, which prompted the company’s high-profile rebrand from Facebook to Meta in 2021. That gamble has yet to pay off, as adoption of metaverse platforms remains limited and revenue growth sluggish.
Meta’s New Focus: Mobile and Wearables
According to Bosworth’s memo, Meta’s metaverse ambitions will now shift toward mobile platforms, leveraging the larger user base and faster growth rates in that segment. This likely means a combination of future wearable devices and existing mobile applications.
Bosworth wrote:
With the larger potential user base and the fastest growth rate today, we are shifting teams and resources almost exclusively to mobile to continue to accelerate adoption there.
What Happens to VR?
Meta is not abandoning VR entirely. However, Bosworth emphasized that the VR division will operate as a leaner, flatter organization with a more focused roadmap aimed at long-term sustainability. In practical terms, this means fewer resources for VR development and a slowdown in new product launches. For example, a successor to the Quest 3 headset is unlikely to arrive anytime soon.
Meta’s restructuring reflects a broader industry trend: companies are prioritizing AI-driven wearables and mobile experiences over costly, slow-to-adopt metaverse platforms. For Meta, this pivot could help stabilize financial performance while positioning the company to compete in the emerging AI-powered consumer tech market.
