Meta’s Reality Labs Unit Faces Billions in Losses, Cutbacks in Staff
Earlier this month, Meta made headlines with layoffs affecting 10% of its staff at Reality Labs, the company’s virtual reality unit. Reports indicate that as many as 1,000 employees were let go. Now, new information has come to light revealing the extent of the unit’s financial struggles.
The latest earnings report from Meta, released on Wednesday, showed that the virtual reality business within Reality Labs incurred staggering losses in 2025. The unit reported a loss of $19.1 billion for the year, slightly higher than the $17.7 billion loss in 2024. In the fourth quarter alone, the unit posted a loss of $6.2 billion.
Despite these significant losses, the unit did generate some revenue, with sales totaling $955 million in Q4 and $2.2 billion throughout 2025. During the earnings call, Meta CEO Mark Zuckerberg expressed optimism for the future of the VR team while acknowledging that losses are expected to persist in 2026.
Zuckerberg outlined the company’s investment strategy moving forward, stating, “For Reality Labs, we are directing most of our investment towards glasses and wearables while focusing on making Horizon a massive success on Mobile and making VR a profitable ecosystem over the coming years.” He also noted that losses in 2026 are projected to be similar to those in 2025, with a gradual reduction planned for the future.
Meta’s pivot towards the “metaverse” in 2021 was met with skepticism, and the company has faced criticism for its VR efforts in recent years. The ongoing financial challenges within the VR business raise questions about Meta’s long-term strategy and the potential for a turnaround.
In a recent CNBC report, it was revealed that Meta is not only laying off employees but also closing several VR studios, signaling a shift away from virtual reality. The company has also announced the retirement of its Workrooms app, a VR meeting space aimed at office workers.
Techcrunch event
San Francisco
|
October 13-15, 2026
