Well, there goes the metaverse!

Meta’s massive bet on virtual reality ended this week as the company laid off its employees About 1,500 employees of its Reality Labs division — about 10% of the unit’s employees — and several virtual reality game studios have closed, according to the Wall Street Journal. It’s a big shift for a company that, just four years ago, staked its entire identity on this concept.

Few will miss her.

As industry observers remember, Facebook It has been rebranded It will name itself Meta in 2021, promising to usher in a new era of technology led by virtual reality devices.

In part, the decision was a bet on Gen Z’s preference for socializing in online games like Fortnite and Roblox rather than traditional social media apps. This change also helped Meta move away from the negativity surrounding its brand on Facebook. Over the years, the brand has been damaged by data privacy scandals such as Cambridge Analytica; Reports from a Facebook whistleblower Francis Hoganwho shared documents indicating that Facebook was aware of its negative effects on children and teens; Congressional Hearings on Facebook’s Digital Surveillance; Her role in Spread of misinformation; that it Monopoly practices, and more.

Meta’s vision at the time was that the metaverse would be the next big social platform, where users would connect in a virtual world via… Meta Horizon Realms app and played games on their virtual reality headsets.

Fast forward, and the metaverse has effectively been abandoned in favor of AI.

According to CNBC, some Victims Include studios that make VR titles within Meta, such as Armature Studio (“Resident Evil 4 VR“”), warped pixel(“”Marvel’s Deadpool VR“), and sanko(“”Asgard raged). Meanwhile, virtual reality fitness app Supernatural, which Meta acquired in 2023 to 400 million dollarswill no longer produce new content and will go into “maintenance mode”. Camouflaj, the studio behind the virtual reality game “Batman: Arkham Shadow,” was also reportedly affected by the layoffs. By Jake Wire.

And this week, Edge He pointed out that the Meta program to bring virtual reality to work, work rooms, The operation is turned offalso.

This news comes on the heels of a previous Bloomberg report released in December, which stated that Meta He was cutting The virtual reality department’s budget is up to 30%. Around the same time, Meta announced that it was Stop her program To share its Meta Horizon operating system, which runs on Quest-branded VR headsets, with other headset makers.

Unlike Meta’s rebranding news, the deprioritization of the company’s shifting efforts shouldn’t come as a surprise — the department lost money at an exaggerated rate, worrying InvestorsAnd he never made a profit.

In total, the company transferred some 73 billion dollars To reality laboratories. To put that in context, you would have to spend $1 million every day for 200 years to match that kind of spending.

“Building in the open” fails

next to being exaggerated By investors and Analysts Both, the initial releases of the metaverse were just bad products. These goofy, soulless avatars had no legs and one arm Metaverse selfie Meta CEO Mark Zuckerberg It was so bad that it became a viral meme. In short, Meta was overpromising the future while its product remained unfulfilled. It was a failure of the “build in openness” model, where early technology products are shipped to consumers in the hope of getting feedback that can be used for iteration.

This model works when customers are actively interested in technology. But in the transition, there was only moderate consumer demand. Although Meta quickly gained a Majority share in the virtual reality market With the Oculus headset, headsets have seen a decline in sales. last spring, Counterpoint Research noted Global shipments of virtual reality headsets fell by 12% year over year in 2024, the third consecutive year of decline. Meta accounted for 77% of 2024 headphone shipments.

Meta, which bet on an “if you build it, they will come” strategy, was more concerned with the profits that could be made from powering its platform of apps and games than with whether or not consumers even wanted so-called flip computers.

Specifically, Zuckerberg was looking for a way to bypass Apple and Google’s ability to leverage meta revenue through their app stores.

“This has been a humbling time, because as big a company as we are, we’ve also learned what it’s like to build for other platforms. And living by their rules has profoundly shaped my views on the tech industry,” Zuckerberg said. he said in a keynote speech At the company’s Facebook Connect 2021 event, a reference to the duopoly between Apple and Google. “I’ve come to believe that lack of choice and high fees stifle innovation, prevent people from building new things, and cripple the entire Internet economy.”

He suggested this world would grow to include a billion people in the next decade, and host “hundreds of billions” of dollars in digital commerce. Like analysts McKinsey & Company. And investment bank City They backed up these dubious predictions with their own estimates that the Metaverse would become a multi-trillion-dollar platform by 2030.

Meta may have had dollar signs in its eyes, but apps built for the metaverse weren’t adopted in huge numbers, at least for a company of Meta’s size.

Although there is no external view of Meta’s virtual reality app store, You can take a look at Meta apps along with their iOS and Android counterparts as an adoption alternative. Based on typical estimates from application information provider Utopiathe Meta Horizon app has been downloaded 60.4 million times globally and 39.8 million times in the US since May 2018. However, a better estimate of adoption is app activity.

From a US panel, Apptopia has figures for average sessions per daily active user in the US, which rose from 3.49 in January 2023 to 4.93 in January 2026. Although this is still a high mark for the app, it may not have been enough for the meta.

For comparison, outside of VR, the Meta has it now More than 3.5 billion Daily active users across its social apps Facebook, Instagram, WhatsApp and Messenger.

Of course, if all of this had worked, Meta would have created a new social empire, built on the back of virtual reality gaming — not unlike the early days of Facebook as a social network, when partners As Zynga — whose games included Farmville and Words with Friends — led Double-digit revenue streams For Facebook. (Eventually, a 30% cut in virtual goods sales on Facebook, coupled with the platform’s restrictive policies, prompted Zynga to launch its own gaming portal and shift to mobile.)

But this time, Zuckerberg telegraphed his desire to cash in on developers’ revenues very early. Meta might have had a better chance of attracting developers to VR design if it promised to undercut the standard 30% fees charged by Apple or Google, or those of other gaming platforms. Instead, Meta did the opposite: it charged higher fees.

Even before VR became a big platform worth investing in, Meta announced its plans to take it on 47.5% of digital asset sales Within Horizon Worlds, consisting of a 30% hardware platform fee and another 17.5% fee for Horizon Worlds itself. Creative people, not surprisingly, She wasn’t happy.

Just as bad, Meta wasn’t building the Metaverse with user safety as the top priority. As with its push to expand its social network, the company has tended to be reactive rather than proactive when it comes to safety features. For example the company only Introduced the “Personal Boundaries” feature.which placed a buffer zone between avatars, after reports that users were an experience sexual harassment In the metaverse. In some cases, users participated in Virtual rape and Gang rape In the Meta’s Horizon worlds. dead Later call the security feature a little By setting Personal Boundaries to only default to “on” when a user interacts with “non-friends” in the metaverse and allowing users to turn it off completely.

In May 2022, TechCrunch asked a Meta representative to provide details on its support procedures for Horizon Worlds. The company described several tools, including blocking and reporting features, a “Safe Zone” button for users to instantly block and mute others, and a feature to temporarily remove annoying people from Places created in response to user feedback. Despite identifying these tools, Meta declined to specify what kind of actions it would take to address bad behavior by individuals.

At the time, users told TechCrunch that those who encountered abuse in the Metaverse would often react with an apparent gesture: Instead of recording the abuse, they would take off their headsets and take a break from VR. But when they returned, the harasser still appeared in the list of recent encounters, and it was too late to file an abuse report with the video and audio attached.

It appears that these types of scenarios were not thought through from the beginning, and there were no detailed policies about what constitutes abuse. when Metaverse Code of Conduct It was later published, but did not detail any consequences other than saying that Meta would “take action on users.”

Also at this time, Meta declined to share the makeup of its team building the metaverse with TechCrunch. (But if we had to bet, we’d think there weren’t as many women on the project as men. That would Reflects meta composition in generalSo it’s not a bad bet!)

Augmented reality, mixed reality, and artificial intelligence are proving to be more popular

Another nail in the coffin of the shift has been the success of Meta’s Ray-Ban AR glasses, which have seen increased interest from consumers in recent months. with Features Like the ability to Hands-free recordingstreaming music, and Chat with Meta AIthe glasses started Outsells traditional Ray-Ban products In some retail stores in 2024. The company is now considering Double the production of glasses Bloomberg reported this week to meet consumer demand.

With a focus on artificial intelligence, the company recently Ray-Ban introduced the screen last yearwhich are similar smart glasses that also include a display for apps, alerts, and directions on the right lens. The company has since paused its international plans for the product, citing “unprecedented demand.” (Or rather, over-forecasting inventory).

With other companies, including OpenAI, Amazon, and many startups, eyeing AI hardware as the next potential computing platform, virtual reality appears to be little more than an ancient relic of a vision for the web that never materialized.

Combined, these factors, especially the adoption of artificial intelligence Possible application platformmakes it difficult for Meta to continue to justify spending on VR. Instead, Meta will focus on products that have potential, such as Ray Ban glasses and AI glasses. Artificial intelligence applications growthand Large linguistic models.