Meta Cuts About 10% of Reality Labs and Closes Three VR Game Studios
Three of the studios behind Meta’s biggest Quest exclusives are being shut down this week as the company trims roughly a tenth of Reality Labs, the division responsible for its headsets, glasses and metaverse software. Twisted Pixel, Sanzaru Games and Armature Studio are all closing, and Meta has confirmed it is moving money away from the metaverse and toward smart glasses.
The scale of the layoffs was first reported by The New York Times, which said Meta planned to cut around 10% of Reality Labs staff. CNBC reported that the cuts amount to more than 1,000 jobs. Meta has not published an official headcount, and the final number may differ from early reports.
In a statement given to several outlets, Meta said it is “shifting some of our investment from Metaverse toward AI glasses and Wearables.” That single line sums up a change in direction that has been building for months.
What Meta closed
The three studios account for a large share of Meta’s first-party VR catalog.
Twisted Pixel, founded in 2006 and acquired by Meta in 2022, released Marvel’s Deadpool VR only about two months ago. The game launched as a $50 Quest exclusive and was one of Meta’s main holiday titles. UploadVR noted that closing the studio so soon after launch suggests the game did not sell as well as Meta had hoped. Earlier Twisted Pixel projects included Wilson’s Heart, Defector and Path of the Warrior.
Sanzaru Games made Asgard’s Wrath and its 2023 sequel, Asgard’s Wrath 2, which was bundled with Quest 3 for a time, and it remains one of the largest games on the platform. The studio had said it was working on its next project, but no details were ever made public.
Armature Studio is best known for porting Resident Evil 4 to Quest in 2021. It also made Sports Scramble and Fail Factory.
According to reporting from Bloomberg and Kotaku cited by Road to VR, most or all staff at the three studios are being laid off. Road to VR described the moves as possibly the largest reorganization of the division since Meta adopted the Reality Labs name in 2020.
Supernatural stops getting new content
The cuts also reach Supernatural, the subscription fitness app Meta acquired when it bought developer Within in 2021. In a post to the app’s Facebook community group, Meta said Supernatural will no longer receive new content or feature updates because of “recent organizational changes” at the studio. The app will stay online with its existing library of workouts, and subscribers with questions are being pointed to customer support.
For Supernatural’s paying users, the news means the service they subscribe to is now effectively frozen. The app’s appeal has always rested on a steady flow of new coached workouts and licensed music, so it is not yet clear how long subscribers will stay without them.
Who is left
Meta has now bought nine VR studios since 2019 and closed five of them. Ready at Dawn, maker of Lone Echo, was shut in 2024, and Downpour Interactive, which made Onward, was folded into Camouflaj last year.
The studios still operating are Beat Games, which makes Beat Saber; BigBox VR, maker of Population: One; Within, the Supernatural team; and Camouflaj, developer of Batman: Arkham Shadow. Meta also runs Ouro Interactive, which makes Super Rumble. Camouflaj is not on the list of closures, but it is not yet clear whether the wider layoffs touch the remaining teams, or whether plans for a follow-up to Arkham Shadow are affected.
Why Meta says it is shifting to glasses
The decision follows a year in which Meta’s two hardware lines moved in opposite directions. Quest headset sales were down compared with 2024 through at least the first three quarters of 2025, according to UploadVR’s reading of industry data. Over the same period, Ray-Ban Meta glasses became a genuine hit, with sales more than tripling in the first half of the year according to EssilorLuxottica, Meta’s eyewear partner.
Reality Labs has also been an enormous drain on Meta’s finances. The division has lost tens of billions of dollars since 2021, including an operating loss of $17.7 billion in 2024. Meanwhile, Meta is spending heavily on AI data centers and researchers. Cutting VR content spending and redirecting resources to glasses, which pair naturally with Meta’s AI assistant, fits that larger plan.
What it means for Quest owners and developers
For people who already own a Quest, nothing changes overnight. The games made by the closed studios remain available, and Meta has not announced any change to its headset hardware plans.
The longer-term signal is harder to ignore. First-party studios are how platform owners fund the kind of expensive, polished games that independent developers usually cannot afford to build for a niche market. Deadpool VR, Asgard’s Wrath 2 and Resident Evil 4 were exactly that kind of project. With all three teams gone, the Quest library will rely more heavily on third-party developers, many of whom have struggled with falling sales and have been lobbying Meta for better store visibility and marketing support.
The cuts also raise questions about how Meta will position Quest in its marketing. For several years, exclusive games were a central part of the pitch. If Meta is no longer funding those games itself, it will need either deeper partnerships with outside studios or a different reason for people to buy a headset.
Meta is expected to say more when it reports fourth quarter results in the coming weeks, including how much it plans to spend on Reality Labs in 2026. For now, the clearest message is the one in its own statement: the money is moving to glasses.
Related coverage on Virtual Reality Times
- Meta CTO Bosworth: VR Is “Growing Less Quickly Than We Hoped”
- Meta Reality Labs Posts $4.62 Billion Quarterly Loss Despite Higher Revenue
- Meta’s Reality Labs Posted $3.99 Billion First Quarter Loss
- Meta’s Reality Labs Lost $13.7 Billion in 2022
- Report: Roughly 20% of Meta Staff Working in its Reality Labs Division
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