Remember those massive metaverse cuts that were reportedly in the pipeline? Well, this week they came to pass. Meta’s Reality Labs division, which is responsible for the company’s pursuits in XR and VR, saw a 10% cut, resulting in layoffs of 1,500 people from a division that formerly comprised 15,000. The ripple effects of those cuts are likely to be multifaceted, but if there’s a way one could encapsulate the move in the short term, it’s as a big, very-real-and-not-virtual “f*ck you” to VR gaming.
That’s because it wasn’t just Reality Labs employees that got cut loose in Meta’s most recent layoff round; it was also some of its most important first-party VR gaming studios under Meta’s umbrella and arguably some of the biggest names in VR gaming writ large.
Among the casualties were Sanzaru Games (Asgard’s Wrath), Twisted Pixel (Deadpool VR), and Armature Studio (Resident Evil 4 VR). For those who might not be familiar with VR gaming, those are pretty huge titles in the landscape—or I guess they were some pretty huge titles in the landscape until Meta lopped them off.
I’d be lying if I said I was surprised by Meta’s decision to scale back its Reality Labs division. The unit has been leaking money like a sieve since 2021, hemorrhaging an eye-watering $70 billion over the span of just a few years. If you were looking for a way to shore up money for a big push into generative AI (which Meta very much is), then Reality Labs would be an obvious place to start tightening the proverbial belt. It’s not the cuts that have me surprised, necessarily; it’s where the cuts were concentrated.
As expensive as subsidizing Quest headsets has been, the results have been pretty satisfactory, maybe not in sales necessarily, but in the quality of the hardware. The Quest 3 and Quest 3S are solid VR headsets at a great price point, and while they can be functional for stuff like watching videos, movies, and general computing, easily the best use for VR headsets like the Quest is still gaming.
I wrote back in the day that the Quest 3’s hidden weapon is its strength as a big virtual screen for Xbox cloud gaming, and while glasses from companies like Xreal have probably supplanted the Quest in that territory, the general sentiment remains: VR headsets are still just a toy, and the most fun you can have with them is gaming. The proof of VR gaming’s appeal is in the pudding. Meta has pushed its metaverse and VR social platform Horizon Worlds to almost zero success since its launch in 2021, so that’s objectively a failure.
And work? Well, just take one peek at the Meta Quest Pro‘s lifespan and tell me how well pitching consumers work-focused VR applications has gone. Even watching videos and movies, while interesting and sometimes even enjoyable, never took off in the way that gaming has, mostly because sitting still with a headset on for two hours is just no fun; they’re heavy, they get hot, and no one wants to deal with the marks they leave on your face and nose when you’re done watching.
There’s proof outside of the Quest of what happens without a strong VR gaming ecosystem, too. Apple’s Vision Pro has been a flop for a few reasons, the $3,500 price chief among them, but it also positions itself as a “spatial computer,” which is meant to be used for loads of stuff that isn’t VR gaming. I don’t think that positioning has necessarily helped make the case for spending a massive sum on Apple’s first entrant into the XR/VR space.
In an industry that’s already niche to begin with—like VR very much is—every use case that isn’t gaming (the biggest appeal) has felt downright obscure. That’s why watching Meta gut the one thing that kept interest in the Quest going is so tough to grapple with. Having just taken the annual sojourn to CES, my passion for the future of VR was reignited by next-gen headsets like the Dream Air made by Pimax. I got to demo the recently shipped VR headset myself, and the display was impressive, the hardware was light, and in the several demos the company had set up at its booth, there was only one thing the company thought to showcase.
If you guessed VR gaming, congratulations! Also, my apologies for the no-good, rotten, very bad week. Unfortunately, with the way things are going in VR, there may be more bad weeks to come.
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