Meta has effectively declared its abandonment of the metaverse project, which it had been pushing forward with to the point of changing its mission in 2021.
Meta announced on the 16th (local time) that it will discontinue its virtual reality (VR) collaboration platform Horizon Workrooms and completely end sales of its commercial Quest headset and enterprise software by February 20th. This decision comes four years after Mark Zuckerberg changed the company name from Facebook to Meta and declared the metaverse as the successor to the mobile internet, and is seen as a symbolic event of a strategic shift in the big tech industry.
Massive restructuring and studio closures
With this withdrawal, Meta has begun a restructuring that will involve laying off over 1,000 employees, or about 10% of Reality Labs' workforce, and closing three VR game studios. The studios confirmed to be closing are Armature Studio, Twisted Pixel, and Sanzaru Games, which developed acclaimed VR titles such as Resident Evil 4 VR, Marvel's Deadpool VR, and Asgard's Wrath. Employees were notified of their layoffs on the 13th, and developers expressed their shock on social media.
Supernatural, a VR fitness application acquired by Meta for $400 million in 2023 after a dispute with the Federal Trade Commission (FTC), has also been placed in maintenance mode, meaning no new content or feature updates will be made available. The company announced, "Due to recent organizational changes at the studio, Supernatural will no longer receive new content or feature updates, effective today." For existing Workrooms users, Meta recommends alternatives such as Arthur, Microsoft Teams, and Zoom Video Communications Workplace.
100 trillion won loss and market failure
This withdrawal marks the failure of Zuckerberg's vision of the metaverse as the next-generation computing platform, which he announced in 2021 when he renamed the company Meta. Reality Labs has since posted cumulative losses of over $70 billion (approximately 100 trillion won), including $4.4 billion in the third quarter of 2025 alone. Consumer demand has fallen short of expectations. Meta sold 1.7 million Quest headsets in the first three quarters of 2025, a 16% year-over-year decline.
“All these ideas that augmented reality (AR) and virtual reality (VR) will replace smartphones, they haven’t come to fruition,” Francisco Jeronimo, vice president of data at market research firm IDC, told The Register. “That’s just not going to happen.” According to KPMG, the VR market is expected to grow at a compound annual growth rate of 26.3%, from $11.18 billion in 2024 to $35.97 billion in 2029. However, the rapid market expansion that Meta had hoped for has not materialized.
Shifting Investment Directions to AI and Wearables
Meta is redeploying its investments toward artificial intelligence (AI) and wearable technology, exemplified by its partnership with EssilorLuxottica for Ray-Ban Smart Glasses. Last year, Meta invested $14.3 billion in Scale AI and brought in founder Alexandr Wang to oversee its AI strategy. The company also raised its 2025 investment forecast to $70 billion to $72 billion.
A Meta spokesperson told Engadget, “Last month, we announced that we were shifting our investments from the metaverse to wearables. This is part of that effort, and we plan to reinvest the savings to support wearables growth this year.” Andrew Bosworth, CTO of Reality Labs, announced the news to employees on January 14th in what he described as “our most important meeting of the year.” According to his memo, reported by Bloomberg, the Horizon team will now “intensify its efforts to deliver the best Horizon experience and AI creation tools for mobile.”
According to Fortune Business Insights, the global artificial intelligence market is expected to grow from $375.93 billion in 2026 to $2.48 trillion in 2034, at a compound annual growth rate of 26.60%. The smart glasses market, in particular, is emerging as a new growth engine for the wearable market, growing 110% year-over-year in the first half of 2025 alone. Grand View Research projects that the global smart glasses market will grow at a compound annual growth rate of 27.3% between 2025 and 2030, reaching $8.26 billion by 2030.
Meta's latest decision demonstrates how big tech companies are strategically shifting their focus from the hardware-centric metaverse to software-based AI and lightweight wearables. While large-scale investments in the metaverse have failed, Meta is re-entering the race for next-generation computing platforms, focusing on AI technology and smart glasses.