Meta lays off around 1,000 Reality Labs employees & shuts VR studios in favor of AI push

Meta has big plans with AI, so much so that the company is now quietly stepping back from parts of the metaverse it once positioned as its future. Meta has laid off around 1,000 employees, affecting roughly 10% of its Reality Labs hardware division. The job cuts primarily impact teams working on Quest headsets and VR hardware.

Speaking with Engadget, a Meta spokesperson confirmed the strategic shift, saying the company is redirecting investment away from metaverse projects and toward AI and wearable technology (via Windows Central). The savings from these changes will be reinvested to support growth in those areas.

Alongside the layoffs, Meta is shutting down several in-house VR game studios. Affected studios include Armature Studio, Twisted Pixel, Sanzaru, and Oculus Studios Central Technology, marking a clear pullback from VR-first content development. Meta is also reportedly scaling back its VR software efforts. The Supernatural fitness app will remain usable for existing users, but it will no longer receive new content or feature updates.

Despite the studio closures, Meta says it is not exiting video games entirely. The company maintains that it remains committed to gaming, even as its focus has decreased in recent time. At the same time, Meta is aggressively doubling down on AI. The company has launched a new superintelligence lab, invested $14.3 billion in Scale AI, hired its CEO Alexandr Wang, and begun recruiting AI talent from rivals such as OpenAI.

Concerns are also emerging internally. Former Meta AI scientist Yann LeCun has claimed the company fabricated Llama 4 benchmark results and warned that further layoffs could follow.