Meta is reportedly cooling on the metaverse with planned 30% cuts in its virtual reality research department, Reality Labs, which shareholders seemingly support.
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Social media giant Meta is reportedly planning to scale back its metaverse spending by up to 30% and redirect the funds into virtual reality glasses and artificial intelligence.
No final decision has been made yet, but budget cuts and possible layoffs are , mainly aimed at its virtual reality unit, which eats up the bulk of metaverse-related spending, Bloomberg and The New York Times Thursday.
The budget cuts could come as early as January, but Meta plans to redirect the resources to a Reality Labs unit developing augmented reality glasses.
Wall Street reacted positively to the news, with shares in Meta (META) initially over 5% when the market opened on Thursday, before settling around the $661 mark to gain 3.4% on the day.
Meta rebranded from Facebook in 2021 with the . It has poured billions of dollars into research and development of virtual reality tech, interest in which has as tech firms look to cash in on the hype around AI.
Competition around metaverse cools
Meta is taking the axe to its virtual reality unit as part of its annual budget planning for 2026, partly because the anticipated gold rush around the technology hasn’t been as competitive as anticipated.
Sources told Bloomberg and The New York Times that in 2021, Apple and Google were furiously working on competing virtual reality devices, but the companies have since slowed efforts, which has left Meta executives feeling less pressure to forge ahead.
However, other companies are still working on launching metaverses, with the artificial intelligence startup Infinite Reality music-pirating-turned-streaming service Napster in March with plans to add a music-focused metaverse.
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Meanwhile, the Donald Trump-owned company, DTTM Operations, connected with a metaverse and NFT marketplace built around the US president’s brand.
Meta all in on virtual reality glasses
Meta might be cooling on the metaverse, but CEO Mark Zuckerberg said in a to his X-like Threads platform on Wednesday that his company is opening a new creative studio within Reality Labs, focused on “design, fashion, and technology.”
“We’re entering a new era where AI glasses and other devices will change how we connect with technology and each other,” he said.
“The potential is enormous, but what matters most is making these experiences feel natural and truly centered around people,” Zuckerberg said. “With this new studio, we’re focused on making every interaction thoughtful, intuitive, and built to serve people.”
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