Meta Platforms Inc. is reportedly preparing to lay off approximately 10% of the workforce in its metaverse-focused division, Reality Labs, this week. According to a report from the New York Times, the cuts, which could be announced as soon as Tuesday, January 14, 2026, are expected to affect around 1,500 employees out of the division's total staff of about 15,000.
The layoffs signal a significant strategic pivot for the tech giant, as it reallocates resources from its costly metaverse ambitions toward the burgeoning field of artificial intelligence. This follows reports from early December 2025 that Meta was considering slashing its metaverse budget by as much as 30% to fund AI development, a move that previously caused the company's shares to spike.
Reality Labs, launched in August 2020, has been a major financial drain on Meta. The division, responsible for virtual reality hardware like the Quest headsets and metaverse platforms Horizon Worlds and Horizon Workrooms, has accumulated over $70 billion in losses since its inception. In its most recent financial report for Q3 2025, the unit posted operating losses of $4.4 billion.
The NYT report also indicates that Meta plans to shift some funding from Reality Labs to its wearables division, which focuses on products like smart glasses and the Meta Neural Band wrist device.
The broader metaverse sector, once a major trend in both tech and crypto, has struggled to achieve mainstream adoption. While gaming platforms like Roblox and Fortnite boast hundreds of millions of daily active users, blockchain-based virtual worlds have seen minimal traction. Data from DappRadar shows The Sandbox (SAND) had just 776 unique active wallets in the past 30 days, and some reports suggest Meta's own Horizon Worlds has fewer than 900 daily active users.
Despite the pullback, Meta CEO Mark Zuckerberg has previously expressed continued bullishness on the metaverse's long-term potential, once calling 2025 a "pivotal year" for the industry. The company rebranded from Facebook to Meta in October 2021 in a high-profile commitment to building virtual worlds.
