Meta Prepares Deep Cuts to Metaverse Division as VR Bet Continues to Shrink
Meta is preparing significant reductions across its metaverse division, including Horizon Worlds and its Quest hardware group, as the company scales back its once-ambitious virtual reality push, Bloomberg reported, citing people familiar with the discussions.
Executives are weighing budget cuts of up to 30% for 2026 within the unit responsible for Meta’s metaverse initiatives. The reductions would include layoffs, marking another pullback from the more than $70 billion the company has poured into its VR and AR ambitions.
CEO Mark Zuckerberg has reportedly asked all divisions to target 10% cost savings during recent budgeting cycles, but the metaverse team was directed to go further. The move reflects the slower-than-expected industry adoption of VR and the diminishing enthusiasm across the broader tech landscape that once championed the metaverse vision.
The steepest cuts are expected to hit the virtual reality group, which represents the bulk of Reality Labs’ spending, while Horizon Worlds is also likely to face reductions.
Meta’s stock rose 4% on Thursday following news of the potential cuts and is now up more than 10% year-to-date.
The metaverse—once hailed as the future of digital interaction—centers on interconnected virtual environments accessed primarily through VR headsets. While the idea drew significant hype in 2021 as companies raced to build virtual worlds and invest in digital assets, momentum has since faded. Apple has pivoted toward “spatial computing” with Vision Pro, Microsoft has scaled back mixed-reality projects, and the tech industry has refocused heavily on artificial intelligence.
Reality Labs, home to Meta’s metaverse operations, has accumulated more than $70 billion in losses since early 2021, according to Bloomberg.
