Meta recently downsized its Reality Labs division by laying off 10% of its workforce, affecting up to 1,000 employees. This move appears to be linked to the unit’s substantial financial losses last year, as revealed by the company’s latest earnings report.
On Wednesday, Meta disclosed that its virtual reality business incurred a staggering $19.1 billion in losses in 2025, slightly exceeding the $17.7 billion deficit from the previous year. The fourth quarter alone saw a loss of $6.2 billion for the division.
Despite generating $955 million in sales in Q4 and $2.2 billion throughout 2025, the unit continues to struggle financially. During the earnings call, CEO Mark Zuckerberg expressed optimism for the VR team’s future, although he acknowledged that losses in 2026 are anticipated to be similar to those of the previous year.
Zuckerberg highlighted a shift in focus towards glasses and wearables within Reality Labs, along with efforts to enhance Horizon for Mobile and establish a profitable VR ecosystem in the years ahead. However, he cautioned that losses are expected to persist, with this year likely marking the peak before gradual reduction in the future.
Meta’s pivot towards the “metaverse” in 2021 was met with skepticism, a sentiment that persists as the VR business continues to hemorrhage money. With Meta steering towards AI and away from VR, the future of the struggling division remains uncertain.
Recent reports indicate Meta’s plans to close VR studios and discontinue its Workrooms app, signaling a decline in its interest in virtual reality. These developments reflect a broader shift within the company away from VR technology.
