Meta Lays off ~1,000 Reality Labs Jobs as It Shuts VR Studios

Meta is cutting about 10% of Reality Labs and it isn’t being subtle about it. The layoffs land with a sharp message: Meta is shutting down three in-house VR game studios, the very teams that were supposed to populate Quest with “must-play” titles.

For anyone looking forward to a resurrection of the metaverse anytime soon, this serves as a stark contrast. It is essentially a signal about what Meta intends to build next and what it is willing to stop building altogether.

Closures Matter More Than the Percentage

The headline isn’t the number. It’s the closures.

Meta is shutting down three Reality Labs VR studios that supplied first-party games for the Quest:

Twisted Pixel Games (worked on Marvel’s Deadpool VR)

Sanzaru Games (developers of the Asgard’s Wrath series)

Armature Studio (known for the Resident Evil 4 VR port)

Meta is also slowing development on Supernatural, one of its most popular VR “habit” products. Support continues, but it is effectively in maintenance mode: no new features, no new content(for now), just keeping the servers running.

These studios existed to power a simple flywheel: big first-party games > increased headset adoption > more time spent in VR > more confidence in the metaverse thesis. Shutting them down means Meta no longer wants to feed that loop at the same intensity.

Reality Labs Layoffs: The Direction Is Bigger Than the Number

A 10% cut inside Reality Labs isn’t cosmetic. It’s a reset in how aggressively Meta plans to staff.

The cuts hit the metaverse teams the hardest, especially those working on VR headsets and social apps. This proves that while Meta still wants to build hardware, it doesn't think VR is going to take over the world anytime soon.

Why This Shift? Wearables and Compute are the reason

This is the positioning for the Ray-Ban Meta smart glasses. Reports indicate that Meta and EssilorLuxottica are discussing expanding production capacity to 20 million units annually by the end of 2026.

That scale is not about pleasing early adopters. It’s about mass adoption, getting to the point where the product becomes a daily habit.

This brings the glasses and the computing power together. If Meta wants people to use these AI devices every day, every new pair sold will demand faster and smarter AI to run properly. That means the push for wearables can only succeed if Meta’s AI infrastructure grows big enough to handle the load.

That is the context for Meta Compute. Reuters reports Meta has formed a dedicated “Meta Compute” organization to drive its AI infrastructure, co-led by infrastructure chief Santosh Janardhan and Daniel Gross (former YC partner).

Meta is now defining its compute goals in power, securing 6.6 GW to kickstart a push that will eventually reach hundreds of gigawatts, a scale that reshapes the entire company’s budget.  

What This Shift Really Signals

Meta doesn’t have to “quit” the metaverse for the metaverse to stop being the main event.

The clearest signal is right where the pain is the flywheel Meta tried to build, VR content driving headset growth and it is now too expensive to keep spinning at full speed. In its place, Meta is building a new flywheel: wearables people use daily, powered by AI models, backed by compute at gigawatt scale.