Meta is preparing to cut up to 30% of its metaverse budget, according to several reports citing internal discussions.
The possible reduction signals a major change in the company’s long-term strategy, especially after years of heavy investment in virtual reality projects.
Strategy
Meta spent billions developing virtual reality platforms and hardware, yet interest in these products remained low.
Many users never adopted Horizon Worlds, and sales of VR headsets fell short of expectations. As a result, Reality Labs continued to report large quarterly losses.
Investors grew uneasy; they questioned why Meta kept pouring money into projects that showed little commercial traction. Therefore, company leaders began to rethink their approach.
Now, they are reportedly considering a significant budget cut. The plan may also include layoffs in teams focused on metaverse development.
Although the discussions are not final, this implies a change in priorities.
Budget Cuts
1. Persistent financial losses
Reality Labs has posted multi-billion-dollar losses every year. These losses created pressure. Investors wanted Meta to focus on areas with proven demand.
The metaverse, despite the hype in 2021, did not reach mass adoption.
2. Limited consumer interest
Horizon Worlds never became a widely used platform. It witnessed slow growth and low engagement.
Likewise, VR hardware struggled to reach mainstream levels. Casual users often viewed it as optional, not essential.
Also read: Meta’s “Vibes” Causes Massive Growth in Meta AI App Use
An AI Focus
Meta’s AI efforts, however, continue to gain traction. The company’s smart glasses and AI models received stronger market interest.
Therefore, executives appear ready to redirect resources toward these areas. This may help Meta compete more effectively with other AI-driven companies.
Impact on Employees and Investors
1. Employees
If the cuts go forward, employees in VR and metaverse groups may face job losses. Teams working on Horizon Worlds or VR hardware may experience the largest impact.
2. Investors
Markets reacted positively. Meta’s stock rose after reports of the potential cuts. Investors appear more confident when Meta invests in areas with clearer commercial returns.
