Meta, which operates social media platforms Instagram and Facebook, is rethinking its investments after a group of its products failed to deliver profitable results over the past few years.
Meta’s Reality Labs division produces its virtual reality headsets and augmented reality smart glasses, supporting the company’s overall metaverse vision. The division incurred about $73 billion in losses by 2021.
During the third quarter of 2025 alone, Reality Labs faced a loss of $4.43 billion from operations, according to Meta’s latest earnings report.
Recent data from market research firm IDC, obtained by The Register, revealed that Meta shipped only 1.7 million Quest virtual reality headsets during the first three quarters of 2025, representing a 16% decrease compared to the same period in 2024.
“All these ideas that AR (augmented reality) and VR (virtual reality) will replace smartphones have not happened,” said Francisco Jeronimo, vice president for data and analytics at IDC, in a statement to The Register. “It will never happen.”
The loss comes after Meta spent years investing billions of dollars in its metaverse concept (a 3D virtual world where people socialize, shop, play, etc.) among innovations in virtual reality technology; however, consumer interest in the metaverse has waned in recent years.
According to Google Trends data, “metaverse” was a search term that peaked between late 2021 and early 2022 and has since declined in popularity.
A survey conducted by YouGov in February of last year found that the majority of Americans had not used the metaverse in 2024.
Only 26% of Americans have used the metaverse in the past 12 months.
More or less 1 in 10 The Americans said so no brand presence he would tempt them in the metaverse.
In addition, 29% of non-metaverse users said they would be more inclined to join if equipment costs were lower.
Also, 23% said that more metaverse activities or experiences that interest them push them to join.
In comparison, 22% he said stronger security and privacy protection can be a deciding factor and 19% they would be more interested if they could use the metaverse without VR headset. Source: YouGov
When it lost billions of dollars from its Reality Labs division.Colleen Michaels/Shutterstock” loading=”eager” height=”540″ width=”960″ class=”yf-lglytj loader”/>
When it lost billions of dollars from its Reality Labs division.Colleen Michaels/Shutterstock
As Meta faces a downturn in metaverse consumer demand, it has decided to lay off more than 1,000 employees at its Reality Labs division, according to a recent report from Bloomberg.
The division currently has around 15,000 employees, so the layoffs will reduce the team by around 10%. The job cuts come after Meta CEO Mark Zuckerberg and other company executives began looking at a potential budget cut of up to 30% for the company’s metaverse business last month.
“Beginning today, VR will operate as a simpler, flatter organization with a more focused roadmap to maximize long-term sustainability,” Meta Chief Technology Officer Andrew Bosworth wrote in an internal employee memo obtained by Bloomberg.
Related: Read the leaked email Meta sent to employees who just fired
He also said that Meta will continue to develop the metaverse, but will focus more on bringing artificial intelligence creator tools to mobile devices, rather than intensively developing virtual reality headsets. The company will continue to develop virtual reality headsets, but at a slower pace.
The stronger focus on AI comes at a time when Meta and EssilorLuxottica SA are reportedly in talks to double production of AI Ray-Ban smart glasses to 20 million units by the end of this year.
In addition to the layoffs, a separate internal memo reviewed by Bloomberg revealed that Meta is closing three of its in-house virtual reality game and content studios. This includes Sanzaru, Armature and Twisted Pixel.
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Also, Supernatural, Meta’s virtual reality fitness studio, will stop developing new content and features, but will continue to be a supported product.
“These changes do not mean that we are moving away from video games,” wrote Tamara Sciamanna, director of Oculus Studios, in the internal memo. “Games remain the foundation of our ecosystem. With this change we are shifting our investment to focus on our developers and third-party partners to ensure long-term sustainability.”
The layoffs at Meta come after last year the company reduced its workforce by approximately 5% through job cuts with the aim of eliminating low performing employees.
Many companies across the country have followed in Meta’s footsteps in 2025, and plan to continue this trend affecting the workforce this year, with AI playing a critical role in job cuts, according to a recent survey by Resume.org.
In 2025, most US companies increased their investment in AIwith 27% report a significant increase and 41% notice a slight increase.
Economic uncertainty, trade policy and AI adoption were the main reasons for layoffs in 2025.
More or less six out of 10 companies likely will lay off employees in 2026.
Also, 37% expect that replace roles with AI until the end of this year. Source: Resume.org
“The adoption of AI will reshape the job market more dramatically over the next 18 to 24 months than we’ve seen in decades,” Kara Dennison, head of career consulting at Resume.org, said in a statement.
“We will see continued displacement of routine and process-driven roles as well as entirely new categories of work centered on AI oversight, data ethics, on-the-fly engineering, and human-AI collaboration,” she continued.
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This story was originally published by TheStreet on January 14, 2026, where it first appeared in the Jobs section. Add TheStreet as a Preferred Source by clicking here.