Quick Read
- Meta laid off an estimated 10% of its Reality Labs division, affecting over 1,000 employees.
- Three VR gaming studios – Twisted Pixel, Sanzaru Games, and Armature Studio – were closed down.
- The cuts are part of Meta’s strategic shift from metaverse investments to wearables development.
- Meta’s Reality Labs has incurred over $70 billion in losses since 2020.
- The VR fitness app Supernatural will no longer receive new content or features, though existing support continues.
In a stark recalibration of its ambitious virtual reality strategy, Meta, the tech giant behind Facebook, has initiated significant workforce reductions across its Reality Labs division. These cuts, which occurred on Tuesday, January 13, 2026, are estimated to affect over 1,000 employees, representing approximately 10% of the division’s staff. More profoundly, the move has led to the outright closure of three well-known VR gaming studios: Twisted Pixel, Sanzaru Games, and Armature Studio, sending ripples of uncertainty through the VR development community.
This sweeping restructuring signals a clear strategic pivot for Meta, as the company confirmed it is shifting its investment focus from the expansive, resource-intensive metaverse vision towards the more immediate and tangible realm of wearables. The decision comes after Reality Labs, formerly known as Oculus VR, has accumulated staggering losses exceeding $70 billion since 2020, underscoring the immense financial pressures that have shaped this latest corporate directive.
The Unfolding Reality: Layoffs Sweep Reality Labs
The news broke as employees at the affected studios began to share their experiences on social media platforms. Andy Gentile, a designer at Twisted Pixel, posted on X, stating, “I’ve just been laid off. It appears the entire [Twisted Pixel] games studio has been shut down. [Sanzaru Games] too.” His sentiment was echoed by others, including Kathryn Yu, a VR gameplay designer at Twisted Pixel, who made a similar announcement on Bluesky, and veteran game designer Ray West, who confirmed on LinkedIn that “several Meta game studios were closed today, including Sanzaru.”
The scale of the layoffs within Reality Labs, the division responsible for products like the Meta Quest VR headsets and AI-powered glasses, points to a broader, systemic change within Meta’s long-term vision. While the company has consistently championed the metaverse as the next frontier of digital interaction, these recent actions suggest a more pragmatic approach is now taking precedence. The cuts are a direct response to a re-evaluation of investment priorities, aiming to reallocate resources towards areas Meta believes hold more immediate promise and a clearer path to profitability.
The Studios Shut Down: A Look at Lost Talent
The closure of Twisted Pixel, Sanzaru Games, and Armature Studio marks the end of an era for these once-promising developers under Meta’s umbrella. Each studio brought a unique pedigree and a roster of acclaimed titles to Meta’s VR ecosystem:
- Twisted Pixel: Acquired by Meta in 2021, this Austin-based studio was celebrated for its innovative Xbox Live Arcade and Kinect games such as ‘Splosion Man, LocoCycle, and The Gunstringer. More recently, it developed Marvel’s Deadpool VR for Meta Quest, showcasing its adaptability to the VR medium.
- Sanzaru Games: Joining Oculus Studios (a part of Meta) in 2020, Sanzaru had a strong history with PlayStation, developing collections for iconic franchises like God of War and Sly Cooper. Under Meta, the studio was instrumental in creating the ambitious Asgard’s Wrath VR games, widely regarded as flagship titles for the Quest platform.
- Armature Studio: Founded by former leaders of Retro Studios, Armature was acquired by Meta in 2022. It had a diverse portfolio including games like Batman: Arkham Origins Blackgate and ReCore, and delved into VR with titles like Fail Factory! and Sports Scramble, as well as developing the critically acclaimed VR version of Resident Evil 4.
The impact of these closures extends beyond the studios themselves, affecting the livelihoods of countless developers and artists. Former Twisted Pixel senior artist Dan Greenfield noted that the studio’s closure was “a result of strategy changes at Meta,” while former Sanzaru lead environment artist Tyler Fluharty announced he was “open for work” due to the “unexpected closure of Sanzaru Studios.” These personal accounts underscore the human cost of corporate strategic shifts, even in the fast-paced tech industry.
A Strategic Pivot: From Metaverse Dreams to Wearable Realities
A Meta spokesperson, Tracy Clayton, confirmed the studio closures to Polygon and The Verge, reiterating the company’s commitment to a new direction. “We said last month that we were shifting some of our investment from Metaverse toward Wearables,” Clayton stated. “This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.” This statement provides clarity on Meta’s evolving priorities, indicating a move away from the all-encompassing metaverse vision that has consumed substantial capital without yielding proportionate returns.
The decision also impacts other VR initiatives. Bloomberg reported that the team behind the VR fitness app Supernatural, which Meta acquired in 2023, will no longer develop new content or features, though existing product support will continue. This suggests a broader pruning of non-core or underperforming VR investments. Historically, Meta has not shied away from acquiring and subsequently shuttering studios, a trend evidenced by the closures of Ready At Dawn (developer of Echo VR) in 2024 and Downpour Interactive.
The financial figures speak volumes. Reality Labs’ operating losses, which have surpassed $70 billion since 2020, represent a significant drain on Meta’s resources. While CEO Mark Zuckerberg has consistently maintained that the metaverse is a long-term play, the immediate pressure from investors and the broader market seems to have necessitated a more conservative and focused approach. The shift towards wearables, which include AI-powered glasses and other smart devices, suggests Meta is looking for more immediate, tangible product market fit and revenue generation opportunities.
Meta’s latest round of layoffs and studio closures within Reality Labs is less a retreat from innovation and more a forced reckoning with financial realities and market demands. It signifies a painful but necessary pivot, acknowledging that while the metaverse may still be a distant horizon, the immediate future demands a sharper focus on profitable, accessible technologies like wearables. The human cost is undeniable, yet this strategic realignment reflects a company grappling with the immense challenge of balancing visionary aspirations with the imperative of sustainable growth.