Meta Abandons VR Game Development, Shifts Focus to Mobile and AI

Meta Makes Major Strategic Shift Away from VR

Meta Platforms has laid off approximately fifteen hundred employees from its Reality Labs division, representing roughly ten percent of the unit's workforce, as the company dramatically pivots away from first-party virtual reality game development. The cuts, announced in mid-January twenty twenty-six, resulted in the closure of three prominent VR studios: Armature (known for Resident Evil four VR), Sanzaru Games (Asgard's Wrath), and Twisted Pixel Games (Deadpool VR).

VR Growing Slower Than Hoped

Meta CTO Andrew Bosworth candidly acknowledged at the World Economic Forum in Davos that virtual reality is growing less quickly than the company hoped, necessitating a right-sizing of investment. The restructuring extends beyond game studios, with WARN notices filed in Washington and California indicating layoffs will affect offices in Seattle, Bellevue, Redmond, Burlingame, and Los Angeles by March twenty.

Horizon Worlds Goes Mobile-First

Perhaps most tellingly, Meta's flagship metaverse platform Horizon Worlds, originally built for VR headsets, is now pivoting almost exclusively to mobile phones after seeing really positive pickup on smartphones. Meta is removing Horizon Feed from Quest headsets in an upcoming software update. Bosworth explained the team had product-market fit in the huge mobile market but was forced to build everything twice for both VR and mobile.

Third-Party Focus and Industry Response

Despite the layoffs, Meta says it will focus more on third-party content libraries and ecosystems. However, some developers remain sceptical, noting that Meta also reduced staff who worked with third-party developers and cut funding to programmes like Oculus Publishing. Oculus founder Palmer Luckey, whom Mark Zuckerberg fired after acquiring his company for two billion dollars, defended the cuts, arguing Meta's subsidised first-party games had been crowding out independent developers.

The company is also discontinuing Horizon Workrooms on February sixteen and ending enterprise VR hardware sales on February twenty, whilst simultaneously reallocating resources toward AI glasses and wearables, where it sees more growth potential.