Meta Reduces Reality Labs Workforce Amid Strategic Shift to AI Wearables

Meta Platforms Inc. is implementing significant workforce reductions within its Reality Labs division, responsible for the company's virtual reality (VR) and metaverse initiatives. Approximately 1,500 employees, representing about 10% of the division's staff, are being laid off. This move includes the closure of three VR game studios: Armature Studio, Sanzaru Games, and Twisted Pixel.

A Meta spokesperson stated, "We said last month that we were shifting some of our investment from Metaverse toward wearables. This is part of that effort."

The layoffs are part of a broader strategic shift as Meta reallocates resources from its metaverse projects to focus on artificial intelligence (AI) and wearable technologies. The company has been investing heavily in AI development, including the establishment of Superintelligence Labs and the recruitment of top talent from competitors.

Despite these changes, Meta plans to continue development in VR and the metaverse, albeit with reduced focus and resources. The company is also exploring hybrid products that combine elements of VR and AI wearables, with a new product, Project Phoenix, expected in 2027.

These developments come as Meta faces intensifying competition in the AI space from companies like OpenAI, Google, and Microsoft. The company has already invested over $70 billion in AI development over six years and recently established Superintelligence Labs as a protected division focused on achieving human-level AI capabilities.