- Meta is preparing a budget cut of up to 30% for the metaverse and Reality Labs for the 2026 cycle.
- The division has accumulated more than $60.000-70.000 billion in losses since 2021, with low adoption of Horizon Worlds and VR.
- The adjustments include possible layoffs and a shift of resources towards artificial intelligence and its infrastructure.
- Investors on Wall Street are welcoming the reduction in spending in the metaverse and the increased financial discipline.
After several years of heavy investment in its digital universe, Meta is clearly reducing the weight of the metaverse in their strategyMark Zuckerberg's company is preparing a significant budget cuts in its virtual reality and immersive worlds division And at the same time, it is accelerating its commitment to artificial intelligence, a move that markets have welcomed with relief.
The various leaks in recent weeks all point in the same direction: the technology group is preparing to reduce by up to 30% the resources dedicated to their metaverse projectThis is a significant change of direction, considering that this initiative was the company's flagship project since 2021, when it even decided to rebrand itself from Facebook to Meta.
A strategic shift after years of losses in the metaverse
El The adjustment focuses on Reality Labs, the unit responsible for the virtual reality, augmented reality, and virtual worlds like Horizon WorldsThis department has been the main vehicle for Zuckerberg's vision of an immersive internet where one could work, socialize, and shop using avatars.
However, the gamble has proven far more expensive than anticipated. Since the start of 2021, internal figures point to accumulated losses exceeding 60.000-70.000 billion dollars at Reality Labs, with quarters in which the division has reached to record more than $4.000 billion in negative operating results compared to revenues that barely reached 500 million.
The flagship products in this area—the Quest virtual reality headsets and the Meta Horizon Worlds social environment—have not achieved the mass adoption nor the expected level of competitionIn the case of Horizon Worlds, user growth has been modest and the experience, despite successive improvements, has not yet won over the general public.
This mismatch between the volume of investment and the results obtained has fueled criticism of Investors and analysts, who saw the metaverse as a waste of resources in a context where the sector's priority has shifted towards generative AI and data infrastructures.
Cuts of up to 30% and possible impact on employment
According to sources cited by Bloomberg, Meta executives are discussing a plan to cut up to a third of the budget allocated to the metaverse and Reality Labs in the 2026 fiscal year. The adjustment was reportedly outlined during a series of meetings recently held at Zuckerberg's residence in Hawaii, where the company's big numbers are reviewed.
In parallel, the CEO reportedly asked all departments for a general 10% cost reductionThis practice has become commonplace in recent years of financial discipline. However, the metaverse area would face a more severe cut, of up to 30%, reflecting its diminished importance in the company's roadmap.
The adjustments wouldn't be limited to accounting entries. Leaks suggest that a reduction of this magnitude would be necessary. It will likely be accompanied by layoffs in the metaverse divisionWith departures that could be announced as early as January in some markets, although the company has not yet officially confirmed these decisions.
Among the areas most exposed to cuts are the virtual reality (VR) unitwhich concentrates a large part of the spending on hardware and development, as well as the product of virtual worlds Horizon Worlds and the Quest line of devicesThe goal is to stem the bleeding of resources, simplify projects, and concentrate on the lines with the greatest potential in the medium term.
Zuckerberg's vision versus market reality
When Zuckerberg unveiled his big bet on the metaverse in 2021, he described it as "The successor to mobile internet" and the next great frontier for the company. The idea was that, in a few years, meetings, leisure, and economic transactions would move to persistent virtual spaces, accessible with specific glasses and devices.
Four years later, that narrative has encountered several obstacles. The virtual reality market is growing, but not at a rate that would justify such aggressive investments.And the competition hasn't entered with the force that Meta expected, which has cooled the enthusiasm surrounding a broad and vibrant commercial ecosystem.
The situation has been aggravated by the collapse of some segments of the so-called Web3, such as NFTs and certain crypto projects that, at first, were presented as the fuel for the virtual economies of the metaverseThe volatility of these assets and the lack of solid use cases have diminished the appeal of that part of the proposal.
Added to all this is increased demand from investors in the United States and Europe, who are pressuring for Big tech companies should prioritize projects with clearer returnsIn this context, the general consensus in the markets is that the metaverse, at least on the scale envisioned by Meta, has so far proven to be an unviable business.
Stock market reaction and change in investor mood
Paradoxically, the news that Meta is going to tighten its belt on its big bet for the future has been well received on Wall StreetAfter the cost-cutting plans were announced, the company's shares rose between 3% and 7% during the session, also supported by other corporate announcements.
Part of the market interprets this decision as a sign that Meta Listen to the concerns of shareholders And it is willing to adjust flagship projects when the numbers don't add up. Analysis firms like Bloomberg Intelligence have indicated that a spending cut of up to 30% in the metaverse could reduce operating costs by several billion dollars. significantly improve free cash flow in the next exercises.
The company is also combining these adjustments with other financial measures, such as the approval of periodic cash dividends and more prudent management of share buybacks. All of this contributes to the perception that Meta is seeking a stronger balance between growth, investment, and shareholder returns.
This change in narrative comes after a period of high stock market volatility, in which the value went through several consecutive price swings. double-digit drops from its annual highs, weighed down by doubts about the cost of its infrastructure and the profitability of its most ambitious projects.
From immersive universes to the race for artificial intelligence
While reducing its exposure to the metaverse, Meta is shifting a significant portion of its focus towards the artificial intelligence, both in models and hardwareThe company now competes directly with other tech giants in the race for generative AI and the supercomputing systems needed to train increasingly large models.
On this front, the company has launched initiatives such as the creation of a superintelligence laboratory and the signing of investment agreements with specialized companies, with significant stakes in AI and data infrastructure startups. These deals, valued in the billions of dollars, reflect the strategic priority that management now places on this area.
Meanwhile, Meta continues to develop consumer products linked to artificial intelligence, from chatbots integrated into their social networks This includes devices like the smart glasses developed in collaboration with Ray-Ban, which combine image capture, audio, and contextual assistants. All of these benefit from advances in language models and computer vision.
The shift does not imply a total abandonment of the metaverse, but rather a clear rebalancing: AI takes center stagewhile immersive experiences are more limited and with a much more measured level of investment than in the years of great initial enthusiasm.
An expensive laboratory and a more limited future for the metaverse
The trajectory of Reality Labs in recent years can be read as that of a great innovation lab, but extremely expensiveMultimillion-dollar investments have allowed Meta to position itself among the most advanced players in virtual and augmented reality hardware, although at the cost of enduring very large losses.
Looking ahead to the next fiscal years, the company appears poised to maintain a significant presence in immersive devices and experiencesBut with a more realistic ambition in business terms. The goal is no longer so much to build a parallel universe to replace the current internet, but to integrate VR and AR functions into a broad catalog of products and services.
The move also sends a message to the rest of the technology sector, especially in Europe, where regulators closely monitor the behavior of large platforms: The era of unlimited projects without pressure for profitability is numbered.Even iconic initiatives like the metaverse are forced to coexist with stricter criteria of efficiency and return.
For users and businesses, this change will likely translate into a more gradual and less disruptive evolution of immersive experiences. The metaverse will continue to exist as a concept and as a set of products, but integrated into an environment where artificial intelligence, data, and regulation set the pace for major technological decisions.
Meta's decision to to limit their adventure in the metaverse and redirect resources towards AI It reflects the extent to which the technological climate has changed since 2021: what was then presented as the next great leap for the global internet has become a more limited project, which will have to prove its value while coexisting with pressing priorities such as artificial intelligence, profitability, and regulatory pressure.
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