Meta, the company formerly known as Facebook, reportedly laid off approximately 1,500 employees from its Reality Labs division last week, signaling a significant pullback from its ambitious metaverse endeavors. The layoffs, which impacted about 10% of the unit's staff, also included the closure of several VR game studios, according to The Wall Street Journal.

The move represents a considerable reversal for Meta, which in 2021 rebranded itself and staked its future on virtual reality and the metaverse concept. The company's vision involved VR devices becoming the primary platform for social interaction, particularly appealing to Gen Z users who were increasingly engaging in online games like Fortnite and Roblox. Meta believed this shift would also help distance the company from the negative publicity surrounding the Facebook brand, which had been plagued by data privacy scandals, whistleblower reports, and concerns over its impact on children and teens.

Reality Labs, the division responsible for developing VR and AR technologies, has been a significant financial drain on Meta. While the company has released several VR headsets, including the Meta Quest 2 and the more recent Meta Quest 3, adoption rates have not met expectations. The high cost of the hardware, coupled with a limited selection of compelling VR experiences, has hindered widespread adoption.

The layoffs and studio closures suggest that Meta is reassessing its metaverse strategy and potentially shifting its focus to other areas, such as artificial intelligence. However, the company has not officially announced any changes to its long-term vision. Industry analysts suggest that Meta may be scaling back its investments in VR game development while continuing to explore other metaverse applications, such as enterprise collaboration and training. The future of Meta's metaverse ambitions remains uncertain, but the recent layoffs indicate a significant change in direction.