Meta’s decision to deprioritize virtual reality in favor of AI and Internet-connected smart glasses is sending a chill through the VR ecosystem.
The decision is raising questions about whether the market is slipping into a prolonged slowdown.
“I can see how it feels like a VR winter,” Jessica Young, an independent VR content creator specializing in Horizon Worlds, Meta’s virtual social network, told CNBC.
Earlier this month, Meta laid off 10% of employees within its Reality Labs unit, with the cuts reportedly centered on VR initiatives including the Quest headset business and internal development tied to Horizon Worlds. Teams working on Horizon Worlds were hit especially hard, and some in-house studios were shuttered.
Meta said the changes are part of a broader effort to reallocate Reality Labs spending away from VR and toward AI and wearable devices, including the Ray-Ban Meta smart glasses produced with EssilorLuxottica.
For an industry that has leaned heavily on Meta’s funding, hardware distribution, and ecosystem-building for more than a decade, the cuts have immediate implications. Many developers and studios that depend on Quest hardware sales and the Quest app store now face uncertainty over how aggressively Meta will support VR hardware upgrades, developer incentives, and platform promotion.
A shift away from the metaverse moment
Meta’s pullback stands out given the company’s outsized role in shaping consumer VR. Since acquiring Oculus in 2014 for $2 billion, Meta has spent years positioning itself as the primary engine of mainstream VR adoption. That push culminated in 2021 when Facebook rebranded as Meta, signaling CEO Mark Zuckerberg’s commitment to building the “metaverse.”
Reality Labs has become one of the company’s biggest strategic bets and most expensive experiments. Since late 2020, the division has recorded more than $70 billion in cumulative losses. While Meta has continued to argue that the long-term opportunity is massive, investors have increasingly pressured the company to show returns and prioritize nearer-term growth areas.
Now, developers say the messaging has changed. Few believe Meta will abandon VR entirely, but many see an unmistakable pivot as resources move toward AI systems and smaller, more socially acceptable devices such as smart glasses.
“If Meta’s not putting out a new headset for another year or two, it’s going to feel stale,” Young said. “It already kind of does.”
Smart glasses taking center stage
Meta’s annual Connect conference has traditionally been where the company unveils Quest hardware and outlines its VR roadmap. But in 2025, Meta downplayed new VR headset news and instead highlighted the $799 Meta Ray-Ban Display glasses, which include a single built-in digital screen.
The product reflects a broader industry belief that everyday wearables may deliver mass adoption faster than bulky headsets. Compared with VR headsets, smart glasses can be worn in public without the friction of isolation or discomfort, and their use cases—photos, messaging, AI assistance, lightweight navigation—can fit into daily routines.
That shift creates a potential knock-on effect: the more attention and investment Meta pours into glasses, the less certain VR developers become about long-term support for Quest as a consumer platform. For smaller studios and independent creators, the concern isn’t only hardware sales. It’s whether Meta will keep spotlighting VR content and funding the community that helped build early momentum.
Meta insists VR isn’t dead
Meta executives have worked quickly to push back against speculation that the company is giving up on VR.
“We’re still continuing to invest heavily in this space, but obviously, VR is growing less quickly than we hoped,” Meta’s Andrew Bosworth told tech newsletter Sources. “And so you want to make sure that your investment is right-sized.”
Bosworth also circulated commentary from Oculus VR co-founder Palmer Luckey, who wrote on X that Meta still employs the “largest team working on VR by about an order of magnitude.”
While Luckey said he felt “really bad for the people impacted” by the layoffs, he called the changes “a good thing for the long-term health of the industry, especially the ongoing incentives.”
The remarks hint at a possible recalibration rather than a collapse: less spending on speculative bets, more focus on sustainable products. But even a “right-sized” Reality Labs still matters because Meta’s decisions ripple across developers, accessory makers, and the broader perception of VR’s viability.
The market
Industry data suggests the slowdowns are real—at least for traditional VR headsets.
IDC projects the overall extended reality device category to have grown 41.6% year-over-year to 14.5 million units shipped in 2025. But that growth is driven by smart glasses, not VR headsets. IDC expects VR and mixed-reality headset shipments to fall 42.8% to 3.9 million units in 2025, while AI glasses—both with and without displays—are projected to surge 211.2% to 10.6 million units.
The numbers reinforce a major implication for developers: even if VR remains important for certain audiences, the growth narrative that once attracted massive investment is now shifting toward glasses and AI-driven experiences.
As consumer excitement cools, some industry observers believe VR’s most reliable path forward may be enterprise use cases such as training, design collaboration, and simulations.
Apple’s Vision Pro, despite limited consumer traction, has gained footing as a business tool and has performed relatively well among developers and large companies.
Meta, however, is also narrowing its business-facing VR support. The company said it will end its Horizon managed services program for businesses using Quest headsets in internal workflows such as employee training—another signal that corporate VR may not be central to Meta’s near-term plan.
For creators like Young, the shift is personal as well as economic. She said she plans to continue building in Horizon Worlds, where she earns income through paid creator work and Meta-sponsored competitions. But she worries the platform’s mobile push could dilute what made Horizon valuable in its earlier VR-first days.
She added, “what’s frustrating now is watching people declare it dead without ever having experienced or understanding what it was.”
This glossary will help your understanding of VR.
