Meta Plans Deep Cuts to Metaverse Division as VR Bet Continues to Shrink

Meta is preparing significant reductions across Horizon Worlds and its Quest hardware unit as the company scales back its multibillion-dollar metaverse ambitions, according to Bloomberg, citing people familiar with the matter.

Executives are reportedly discussing budget cuts of up to 30% for the metaverse division in 2026. The unit, which includes Meta’s flagship social VR platform Horizon Worlds and its Quest headset business, is expected to face layoffs as part of the restructuring.

CEO Mark Zuckerberg recently directed all departments to identify 10% in cost savings—a routine target in recent budgeting cycles—but the metaverse group was asked to go much further. According to Bloomberg, the deeper reductions reflect the slower-than-expected industry adoption of metaverse technologies, which has lagged Meta’s earlier projections.

The largest cuts are expected to land on the virtual reality organization, the most resource-intensive component of the metaverse effort. Horizon Worlds is also likely to see trimmed budgets and workforce reductions.

Meta shares rose 4% on Thursday after the report, extending the stock’s year-to-date gains to more than 10%.

The metaverse—an interconnected network of virtual spaces accessed through digital avatars and VR headsets—once drew intense enthusiasm across Silicon Valley. Companies rushed to claim virtual land, experiment with blockchain-based assets, and promote fully immersive online experiences. Meta embraced the vision more aggressively than any other major tech firm, rebranding from Facebook to Meta in 2021 and investing tens of billions of dollars in what Zuckerberg called the next major computing platform.

However, user growth failed to match expectations, and the broader tech sector shifted its focus. Apple prioritized spatial computing with the Vision Pro, Microsoft dialed back its mixed-reality plans, and artificial intelligence eclipsed VR as the industry’s primary battleground.

Reality Labs, the Meta division housing its metaverse operations, has accumulated more than $70 billion in losses since early 2021, Bloomberg reported.