Meta's VR losses hit $19B in 2025, 2026 stays grim - AI News Today Recency

# Meta's VR Losses Hit $19B in 2025, 2026 Stays Grim

Meta's virtual reality ambitions continue to drain billions from the tech giant's coffers. The company's Reality Labs division posted a staggering $19.1 billion loss in 2025, marking a slight increase from the $17.7 billion lost in 2024[1]. Despite aggressive cost-cutting measures and strategic pivots, CEO Mark Zuckerberg warned that similar losses are expected throughout 2026, signaling that Meta's metaverse bet remains a long-term financial burden[1].

The losses are particularly striking when measured against Reality Labs' revenue generation. The division generated only $2.2 billion in total sales during 2025, with $955 million coming in the fourth quarter alone[1]. This means Meta is spending roughly nine dollars for every dollar its VR business brings in—a ratio that underscores the massive investment required to maintain the company's virtual reality infrastructure.

Meta's Strategic Pivot Away From VR

In mid-January 2026, Meta announced significant restructuring within Reality Labs, laying off 10% of the division's workforce—approximately 1,000 employees—and shutting down three major game development studios[3][4]. The closures included Twisted Pixel (developer of Deadpool VR), Sanzaru Games (known for Asgard's Wrath), and Armature Studio (which created Resident Evil 4 VR)[3].

Rather than abandoning virtual reality entirely, Meta is redirecting its focus toward smart glasses and AI-powered wearables[1][2]. During the company's earnings call, Zuckerberg stated that "we are directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on Mobile and making VR a profitable ecosystem over the coming years"[1]. The company also announced plans to retire its standalone Workrooms app, which had been pitched to office workers as a VR meeting space[1].

The strategic shift reflects growing recognition that consumer VR headsets have failed to achieve mainstream adoption, while Meta's smart glasses are reportedly selling better than expected[4]. The company's website has even listed its display glasses with a neural wristband as potentially unavailable due to "high demand"[4].

Cumulative Losses and the Road Ahead

Since 2020, Meta's Reality Labs division has accumulated staggering losses totaling approximately $70-73 billion[3][5]. These mounting losses have made Reality Labs one of the most expensive experimental divisions in tech history. The Q3 2025 loss of $4.4 billion contributed significantly to Meta's overall net income dropping 83% that quarter, largely due to a one-time tax charge of $15.93 billion[4].

Despite the layoffs and studio closures, Meta's total spending on Reality Labs is expected to remain at roughly $20 billion in 2026[2]. Zuckerberg acknowledged this counterintuitive reality during the earnings call, noting that 2026 would "likely be the peak, as we start to gradually reduce our losses going forward"[1]. This suggests that the company views the current level of investment as necessary to eventually achieve profitability in the VR and wearables space.

Meanwhile, Meta's overall capital spending ambitions are expanding dramatically. The company is allocating between $162 and $169 billion for infrastructure and development in 2026, with much of this directed toward artificial intelligence initiatives rather than virtual reality[2].

Industry Impact and Future Prospects

Meta's pullback from VR has sent shockwaves through the virtual reality industry. The studio closures and workforce reductions have eroded goodwill among game developers and consumers who had invested in Meta's metaverse ecosystem[2]. Industry observers note that the sudden and harsh cuts, despite yielding minimal impact on overall Reality Labs spending, raise questions about the wisdom of Meta's approach[2].

However, the company remains committed to making VR "a profitable ecosystem over the coming years," suggesting that the current losses are viewed as an investment phase rather than a permanent drain[1]. The focus on mobile platforms for Horizon and the integration of AI shopping tools may represent a more pragmatic path toward profitability than the original metaverse vision[2].

Frequently Asked Questions

How much did Meta lose on VR in 2025?

Meta's Reality Labs division lost $19.1 billion in 2025, slightly exceeding the $17.7 billion lost in 2024[1]. This represents a loss of roughly $6.2 billion in the fourth quarter alone[1].

Why is Meta continuing to invest in VR if it's losing so much money?

Meta views current losses as an investment phase necessary to eventually achieve profitability[1]. The company believes that smart glasses and wearables represent a major future market, and it's betting that early dominance in this space will pay dividends long-term[2][4].

Will Meta's VR losses improve in 2026?

According to CEO Mark Zuckerberg, Reality Labs losses in 2026 are expected to be "similar to last year," meaning losses will remain around $19-20 billion[1]. However, Zuckerberg stated that 2026 would "likely be the peak" before losses gradually decline[1].

Which studios did Meta close?

Meta shut down three major game development studios: Twisted Pixel (Deadpool VR), Sanzaru Games (Asgard's Wrath), and Armature Studio (Resident Evil 4 VR)[3][4]. The company also cut jobs at other studios including Ouro Interactive, which develops games for Horizon Worlds[4].

How much has Meta lost on VR since 2020?

Since 2020, Meta's Reality Labs division has accumulated cumulative losses of approximately $70-73 billion[3][5].

Is Meta abandoning virtual reality completely?

No, Meta is not abandoning VR entirely but rather pivoting its strategy[1]. The company is shifting focus toward smart glasses and AI-powered wearables while working to make VR profitable on mobile platforms through Horizon[1][2].