Meta is preparing to eliminate roughly 10% of roles at Reality Labs, the division behind its virtual and mixed reality hardware and software, according to reporting by The New York Times. With headcount around 15,000, the reduction could affect more than 1,000 employees and marks a significant pruning of the unit most closely tied to the company’s metaverse ambitions.
The move signals a recalibration rather than a retreat. Reports indicate Meta aims to redirect spending toward augmented reality initiatives and core platform work while tightening its VR content footprint. The company has not publicly commented on the reported changes.
What the Reported Cuts Target Across Reality Labs
The New York Times reported that teams focused on augmented reality hardware are expected to be spared, with cost savings earmarked for AR devices such as glasses and input systems. That aligns with Meta’s long-stated goal of building lightweight, socially acceptable AR wearables that can eventually do what smartphones do, without the phone.
CNBC reported Meta plans to shutter several internal VR studios, including Armature Studio, Twisted Pixel, and Sanzaru, as well as a technical group known as Oculus Studios Central Technology. Those teams contributed to high-profile Quest titles such as Resident Evil 4 VR and Asgard’s Wrath, underscoring that this reorganization would touch both content creation and platform tooling.
A Rebalance Toward AR and AI Across Meta’s Platforms
Meta’s center of gravity has steadily shifted toward artificial intelligence. The company created a Superintelligence Labs group, recruited senior leaders to accelerate long-horizon AI work, and reassigned executives with metaverse pedigrees to AI product roles. Reports noted that Vishal Shah moved to oversee AI products, reflecting how AI now cuts across every surface of Meta’s apps and devices.
At the same time, Meta has shown traction with near-term wearable products like Ray-Ban Meta smart glasses, which integrate voice AI and camera features. Doubling down on AR while leaning on AI to power experiences is consistent with the broader industry view that truly mainstream spatial computing will likely emerge from glasses, not headsets.
Implications For VR Pipeline And Partners
Winding down internal studios could slow Meta’s first-party pipeline but may open more space for external developers and publishers. Meta already relies on a wide mix of partners for Quest content, and it can use funding programs, timed exclusives, and platform incentives to keep the catalog healthy without carrying as many fixed costs in-house.
The strategic question is whether fewer first-party bets will weaken flagship system sellers or simply reduce overlap with third-party output. With competition from players like Apple in high-end spatial computing and a steady stream of PC and console crossovers into VR, Meta’s curation and developer support will matter as much as internal production.
Financial Context and Market Reality for Reality Labs
Reality Labs has been a long-term investment with heavy losses. Meta’s filings showed Reality Labs operating losses of about $10.2 billion in 2021, $13.7 billion in 2022, and $16.1 billion in 2023, with revenue that remains modest relative to spend. The company has consistently framed those figures as the cost of building foundational platforms for the next computing era.
Market data underscores how tough the category is. Analysts at IDC have estimated that Meta remains the leading VR headset vendor by unit share, yet global AR/VR shipments have been volatile, with demand concentrated around a handful of hit devices and holiday cycles. That backdrop rewards tighter focus: fewer bets, clearer roadmaps, and hardware that feels more like everyday wear than specialty gear.
What to Watch Next as Meta Reorganizes Reality Labs
Business Insider reported that CTO Andrew Bosworth convened an all-hands billed as the most important in-person meeting of the year, suggesting major announcements are imminent. Key signals to watch include the scope of roles affected, confirmations around studio closures, and how Meta articulates its AR hardware timelines.
If the cuts land as reported, expect Meta to emphasize disciplined spending, AI-infused experiences across devices, and a tighter bridge from today’s VR to tomorrow’s AR. How effectively the company sustains Quest’s momentum while reallocating resources toward glasses will define the next chapter for Reality Labs.
