Meta (META) may be distancing itself further from the metaverse it once invested heavily in.
According to a Bloomberg report citing knowledgeable sources, executives are considering budget reductions of up to 30% in the metaverse division by 2026. This division includes Horizon Worlds, Meta’s social virtual reality (VR) platform, and its Quest headset business. These cuts may result in layoffs, the report indicated.
Mark Zuckerberg, Meta’s founder and CEO, reportedly requested all departments to achieve 10% cost savings, which has been a common request in recent budget cycles. However, the metaverse team has been asked to cut more, as the overall tech sector has not adopted the metaverse as quickly or thoroughly as Meta had anticipated, Bloomberg reported.
The largest reductions are anticipated to impact the virtual reality group, which represents most of the spending related to the metaverse. Horizon Worlds is also expected to face budget cuts.
Following the report, Meta’s shares increased by 4% on Thursday, and the stock is up over 10% year-to-date.
The metaverse signifies a collection of interconnected virtual environments where users can work, play, and interact using digital avatars, often via virtual reality headsets. At its height, the concept captured the imagination of Silicon Valley, prompting companies to rush to secure virtual real estate, acquire blockchain-based assets, and propose innovative tools for an immersive internet.
Meta has invested more than anyone else, rebranding from Facebook to Meta in 2021 and pledging tens of billions of dollars to what Zuckerberg referred to as the “next frontier” of computing.
However, user adoption did not meet expectations, and the tech landscape shifted focus. Apple embraced spatial computing with the Vision Pro, Microsoft curtailed its mixed-reality ambitions, and AI emerged as the new frontier.
Meta’s metaverse division falls under the Reality Labs sector of the company, which has incurred losses exceeding $70 billion since the beginning of 2021, according to Bloomberg.
