The metaverse has to cut back: Actual layoffs in virtual reality

The swan song for the metaverse enters its second act: Meta Platforms is reportedly set to fire ten percent of the staff in its metaverse division, Reality Labs, as early as this week, perhaps even more. This is reported by the New York Times, citing three insiders. When asked, heise online did not deny the report and merely declined to comment.

Reality Labs reportedly has around 15,000 employees, and Meta Platforms has around 78,000 in total. Andrew Bosworth, Meta's chief technology officer and head of Reality Labs, has invited the entire Reality Labs division to a meeting on Wednesday. But not just any meeting, but arguably the most important of the year. According to a report by Business Insider, he is urging employees to attend in person. For an organization dedicated to virtual reality, that alone is a defeat.

But twelve years of billions in metaverse losses have left their mark. Or how much advertising have you clicked on in Horizon Worlds? Exactly. Meta Platforms has spent over 100 billion US dollars on the metaverse since 2014 and has spent 73 billion US dollars more than it has generated in revenue in the past six years alone. Meta can no longer afford this, as it is now pouring enormous sums into the race for the first superintelligent AI.

Business Insider also quotes another circular from Bosworth from almost a year ago. At the time, the manager described 2025 as the “most decisive” year of his tenure as head of Reality Labs: 2025 “will likely determine whether the entire endeavor goes down in history as the work of visionaries or as a legendary mishap.”

VR will be cut, AR likely not

In April, waves of layoffs followed at the company's own VR game studio, Oculus Games, and the VR fitness app, Supernatural. That was the overture. In December, CEO Mark Zuckerberg ordered a general austerity drive: all departments except the AI division TBD Labs were to cut their budgets for the new year by ten percent.

Only Reality Labs has to cut by 30 percent. The first act concluded with the stock market cheering this shift away from VR towards AI. The second act is likely to begin on Wednesday with the wave of layoffs.

However, it will not affect all parts of Reality Labs equally. While virtual reality continues to search for a mass market, for which price increases for the VR headset Meta Quest are not conducive, Zuckerberg expects better chances with augmented reality (AR). That part of Reality Labs that develops connected glasses and wearable computers will likely be largely spared from the job cuts. After all, the Ray-Ban sunglasses with cameras and AI assistants are expected to sell better than VR headsets. Consequently, the cuts in the VR workforce will be sharper.

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