Meta doubles down on AI as Quest hits record usage amid workforce cuts
Layoffs & Job Cuts
Meta Platforms, Inc.
VR / AR / XR
Studio Scale & Headcount
Generative AI
Cost Structure & Budgets
📌 Summary
Meta laid off ~700 employees across recruiting, sales, Reality Labs, and social media teams
Cuts are part of a broader AI-driven resource reallocation, with 2026 spending forecast at up to $169B
Despite layoffs and studio closures, Meta Quest usage reached an all-time high in 2025
Reality Labs posted $2.2B in revenue but a $19.2B operating loss
"Our investment in Meta Quest and games for Quest remains very high - we've a lot going on: new hardware, new audiences, new games." - Chris Pruett, Director of Games, Meta
✂️ Workforce cuts tied directly to AI infrastructure push
💸 AI spending set to dominate Meta's 2026 budget
🥽 Quest platform hits record engagement despite headwinds
📉 Reality Labs financials remain deeply in the red
🌐 Horizon Worlds removed from Quest store following failed retention experiment
🔭 What's ahead - hardware, new audiences, and continued VR investment
Meta laid off approximately 700 employees across recruiting, sales, social media, and Reality Labs
Affected roles span both operational and product-facing functions
CEO Mark Zuckerberg has stated AI tools will allow smaller teams to handle work previously requiring larger ones
"Teams across Meta regularly restructure or implement changes to ensure they're in the best position to achieve their goals." - Meta spokesperson
This round may be only the first phase - earlier reports flagged potential cuts of up to 20% of total workforce
💸 AI spending set to dominate Meta's 2026 budget
Total 2026 expenses forecast between $162B and $169B
Spending driven primarily by data centre construction and competition for specialised AI talent
Resources are being actively shifted away from non-AI divisions, including Reality Labs
🥽 Quest platform hits record engagement despite headwinds
Meta Quest usage reached an all-time high in 2025
Over 100 titles generated more than $1M in gross revenue
In-app purchase revenue grew over 10% year-over-year
Number of IAP apps reaching $500K+ in revenue increased 20%
Subscription revenue grew by double-digit percentage points, though remains a small share of the overall ecosystem
Meta Horizon+ surpassed 1 million subscribers and paid out nearly $20M to developers
📉 Reality Labs financials remain deeply in the red
Reality Labs generated $2.2B in revenue in 2025
Division reported a $19.2B operating loss for the same period
Losses continue despite record platform engagement and revenue growth in key categories
Meta has shuttered several VR studios and scaled back metaverse initiatives in 2025
🌐 Horizon Worlds removed from Quest store following failed retention experiment
Meta pulled Horizon Worlds from the Meta Horizon Store in June 2025
Decision followed a year of data collection and experimentation on device retention impact
"After a year of collecting data, experimenting with different landing pages, we concluded that our hypothesis about Worlds' impact on device retention had not been proven out." - Chris Pruett, Director of Games, Meta
Developer community feedback was cited as a significant factor in the final decision
🔭 What's ahead - hardware, new audiences, and continued VR investment
Meta maintains it is the largest investor in VR globally, by a wide margin
New hardware launches and audience expansion remain active priorities for the Quest platform
Further workforce restructuring cannot be ruled out as AI transformation continues across the organisation
Premium app sales and IAP growth suggest the Quest ecosystem has a viable commercial foundation to build on
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