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Meta has seen several shake-ups over the past year, from shifting focus to smart glasses, including its Meta Ray-Ban Display specs, to potentially increasing the price of Meta Quest for more "premium" VR headsets. But now, it's seen a major restructuring of its VR department.
Recently, Meta laid off 10% of its Reality Labs division, which is around 1,500 people. This includes its social platform, Horizon Worlds, along with the closure of several VR studios, such as Sanzaru Games — the developer behind Asgard's Wrath and a reported Batman: Arkham Shadows sequel (via UploadVR).
In light of this, the future of Meta Quest VR has been put into question, with concerns about what will come next for the Quest 3 and Quest 3S, along with the expected Quest 4 that's tipped to be in the works. Mind you, this shift in focus from VR is to push the development of AI smart glasses, such as the company's wearable range like the Ray-Ban Meta (gen 2).
It appears Meta's VR plans are looking bleak, but Oculus founder Palmer Luckey has a different outlook. Speaking about the shake-up on X, Luckey says "the 'Meta is abandoning VR' narrative is obviously false," but there's reason to believe the doom-and-gloom narrative.
Not a 'disaster' after all?
I have an opinion on the Meta layoffs that is contrary with most of the VR industry and much of the media, but strongly held.This is not a disaster. They still employ the largest team working on VR by about an order of magnitude. Nobody else is even close. The "Meta is…January 19, 2026
There haven't been many updates to the Meta Quest 3/3S and Horizon OS as of late, aside from a small update to Horizon TV announced during the smart glasses-heavy Meta Connect 2025. Already, this puts VR in a tough spot, and the layoffs don't make it any better. But Luckey explains on X how this could be a "good thing" in the long run.
"This is not a disaster," Luckey states. "They still employ the largest team working on VR by about an order of magnitude. Nobody else is even close. The "Meta is abandoning VR" narrative is obviously false, 10% layoffs is basically six months of normal churn concentrated into 60 days, strictly numbers wise."
Luckey continues: "The majority of the 1,500 jobs cut in Reality Labs (out of 15,000) were roles working on first-party content, internally developed games that competed directly with third-party developers. I think this is a good decision, and I thought the same back when I was still at Oculus."
While the number of workers now laid off seems like a staggering amount, Meta's VR presence is strong and there will still be people working on the metaverse and Quest's ecosystem. So, it's not like the company is outright abandoning its virtual reality front (yet), although we may not see many heavy-hitters when it comes to first-party VR games.
Of course, with XR studios including Armature Studio, Twisted Pixel and Sanzaru Games being scrapped, the developers of the biggest first-party games like Marvel's Deadpool VR (Twisted Pixel) and Resident Evil 4 VR (Armature Studio), this still doesn't paint the state of VR in a good light.
I think this is a good decision, and I thought the same back when I was still at Oculus
Oculus founder Palmer Luckey
In the post, Luckey further explains how Meta's VR plan should play out: "Change always sucks because people lose their jobs in the process, but in a world of limited resources, Meta heavily subsidizing their own (with money, marketing, placement, etc) at the expense of core technical progress and platform stability doesn't make sense.
"Crowding out the rest of the entire ecosystem, even less so. Every developer big and small, even the hyper-efficient ones, have had an extremely hard time competing with games developed by Meta-owned teams with budgets and teams that spend vastly in excess of earning potential. People will point out that these teams did an awesome job and got awesome reviews from critics and customers alike — yes, and f*cked up though it is, that makes the problem even worse!
"Some people will say 'they should have just funded those developers as external studios rather than acquiring them, then!' Yes, I agree, but hindsight is 20/20. Do you think Oculus expected to only sell 700 copies of Rock Band VR after spending eight figures to make sure it was ready and awesome for Rift CV1 launch, to the point of bundling the guitar adapter with every single headset? Of course not, but sometimes you learn what the world actually wants from you the hard way."
VR isn't dead (yet)
While Luckey's comments spark interest, stating that "this is a good thing for the long-term health of the industry, especially the ongoing incentives," other recent cancelations doesn't bode well for VR systems.
Along with a Batman: Arkham Shadows sequel apparently being canceled due to the layoffs, A Harry Potter VR game has also reportedly been cut, according to YouTuber Gamertag VR. This was set to be developed by Skydance Games, the studio behind Skydance’s Behemoth, and it was said to be a Quest exclusive.
These are popular IPs, with the success of Hogwarts Legacy standing as a fine example. Not having these VR titles in the works isn't ideal, as it would have been expected to prove popular with Quest owners, and possibly see more consumers flock to the platform.
For now, it's hard to say what Meta's strategy is for VR As of December, the company's Reality Labs division lost more than $77 billion since 2020, as The Wall Street Journal reports. Perhaps a shift in focus was needed, but it still doesn't result in an optimistic outlook for the state of VR.
Meta invested heavily in VR gaming, along with how its Quest 3 and Quest 3S could be used for productivity and entertainment (such as its Mixed Reality Link for Windows 11 PCs). With this in mind, as Road to VR fittingly points out, if a company like Sony or Nintendo started closing its first-party gaming studios, it would rub consumers using the platform the wrong way.
In any case, the state of VR is set to change in a big way, and while we at least have Valve's Steam Frame to look forward to, the future of Meta Quest VR feels up in the air.
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