In 2021, Facebook rebranded itself as Meta, signalling an ambitious pivot toward the metaverse as the next evolution of the internet. Just a few years later, that vision is clearly taking a back seat to generative AI.
According to people familiar with the situation, Meta has begun winding down major parts of its virtual reality and gaming operations. The company is shutting down several internal VR game studios, including Armature Studio, Twisted Pixel, Sanzaru Games, and Oculus Studios Central Technology.
The restructuring has reportedly led to layoffs affecting up to 1,000 employees, roughly 10% of Meta’s Reality Labs hardware division, which oversees development of Quest headsets and related VR technology.
Supernatural and VR gaming take a hit
As part of the pullback, Meta’s popular VR fitness app Supernatural will no longer receive new content or feature updates. Developers confirmed that while the app will remain accessible for existing users, active development has stopped.
These moves reinforce the perception that Meta is scaling down its ambitions in VR gaming, even as it publicly insists it is not abandoning the space entirely.
From metaverse to wearables and AI
In a statement to Engadget, a Meta spokesperson said the company is redirecting resources away from the metaverse and toward wearables:
“We said last month that we were shifting some of our investment from Metaverse toward Wearables. This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.”
The shift has been visible for months. Meta launched the Quest 3S headset in 2024, but has since gone quiet on major VR initiatives. Last month, the company reportedly paused development of its long-anticipated Horizon OS headsets with ASUS and Lenovo.
AI now dominates Meta’s future
While VR is losing momentum internally, Meta is aggressively doubling down on AI. The company recently announced a new superintelligence lab, invested $14.3 billion in Scale AI, and hired its CEO, Alexandr Wang, to co-lead key AI operations. Meta has also been actively recruiting top researchers from rival labs such as OpenAI.
However, the AI push has not been without controversy. AI researcher Yann LeCun, who recently departed Meta, claimed the company fabricated benchmark results for Llama 4 to keep pace with competitors. LeCun has also warned that further layoffs may be coming.
Taken together, the studio closures, halted headset projects, and job cuts paint a clear picture: Meta’s once-grand metaverse ambitions are no longer front and center. Instead, the company is betting its future on AI and wearables — even if that means quietly shelving the very vision that inspired its name change just a few years ago.
