According to CNBC, Meta laid off 10% of its Reality Labs employees last week, cutting approximately 1,000 jobs focused on VR initiatives like the Quest headsets and the Horizon Worlds social platform. The cuts are part of a strategic pivot to redirect Reality Labs investments away from VR and toward artificial intelligence and wearable devices like the Ray-Ban Meta smart glasses. This shift is stark for a company that has poured over $70 billion in cumulative losses into Reality Labs since late 2020 and became synonymous with the metaverse after its 2021 rebrand. The move has independent creators and developers worried, with some describing the atmosphere as a potential “VR winter.” Meta’s tech chief, Andrew Bosworth, insists the company isn’t abandoning VR, but admits growth has been slower than hoped.
The market has spoken, and it doesn’t want VR
Here’s the thing: the data is brutal. A recent IDC report projects that shipments of VR and mixed-reality headsets will plummet 42.8% in 2025 to just 3.9 million units. The entire “XR” category is still growing, but that growth is now entirely driven by AI-powered smart glasses, which are expected to surge 211%. The headset dream—that everyone would want to strap on a bulky device for hours—is basically dead for the mainstream. As IDC’s Jitesh Ubrani put it, the market has spoken. It’s a niche for gamers, not the next smartphone.
Was the iPhone comparison a huge mistake?
Andrew Eiche from Owlchemy Labs nailed it by calling that comparison a “strategic mistake.” For a decade, the tech industry kept waiting for VR’s “iPhone moment,” that explosive, paradigm-shifting adoption. It never came. Eiche says VR’s trajectory looks more like the early Atari era—a boom, then a famous crash, followed by a long rebuild. That’s a much slower, more painful road. And it creates a vicious cycle: if Meta, the dominant platform holder, pulls back on hardware updates, the whole ecosystem feels it. Developers like Eiche are “at the mercy of Meta.” No new Quest headset for a year or two? The platform feels stale, investment dries up, and the winter deepens.
So where does VR go from here?
Oddly, Palmer Luckey might be right that this pullback is “a good thing” long-term. As he noted on X, Meta still has the largest VR team by a mile. A correction forces the industry to find real, sustainable use cases instead of burning cash on a sci-fi fantasy. The enterprise sector, while not glamorous, shows “slow but upwards movement” because companies see ROI in training and design. Apple’s Vision Pro, for all its lack of mass appeal, is finding a foothold as a business tool. Maybe VR’s future isn’t in everyone’s living room, but in specific workplaces and dedicated enthusiast circles. It’s a tool, not a universe.
The real cost of Meta’s pivot
The human and creative cost is the real story, though. As Bosworth explained in a Sources newsletter, investment needs to be “right-sized” for the growth. But that corporate logic shuts down studios and hits teams hard. For creators like Jessica Young, Horizon Worlds was a special place, a “lifeline” during COVID that empowered new creators. Meta’s new mobile-focused, Roblox-like direction for Horizon might make business sense, but it loses that unique VR-centric magic. The frustration is watching something that meant a lot to a community be declared dead by outsiders who never understood it. So, is it a winter? For the hype cycle, absolutely. For the people building in this space, it’s a harsh, uncertain season. But it might just be the cold the industry needed to finally grow up.
