Meta has announced a sweeping overhaul of its virtual reality division, Reality Labs, which includes the immediate closure of three established internal development teams: Twisted Pixel, Sanzaru Games, and Armature Studio. These closures are part of a major restructuring effort that is reportedly eliminating over 1,000 jobs—roughly 10% of the entire Reality Labs workforce responsible for the company’s Quest hardware and software development.
The layoffs, which began this week, signal a definitive strategic shift for the tech giant. According to Meta, resources previously dedicated to its deep investment in the Metaverse are now being reallocated toward developing AI wearables and improving core phone features. A spokesperson confirmed the move, stating the company is actively “shifting some of our investment from Metaverse toward Wearables.”
The three shuttered studios were integral to Meta’s first-party VR content strategy over the past five years. Sanzaru, acquired in 2020, was the team behind the critically acclaimed *Asgard’s Wrath 2* and previously worked on the *Sly Cooper* series. Armature Studio delivered the hugely popular *Resident Evil 4 VR* experience, while Twisted Pixel, known for Xbox 360 hits like *‘Splosion Man*, recently released *Marvel’s Deadpool VR*.
While this move raises serious concerns about the future of internal VR development—following the closure of Ready At Dawn last year—Meta insists it remains committed to gaming. However, future investment will reportedly focus on external partners. An internal memo suggests the company is “shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability.”