Meta's Reality Labs is burning money. Recent layoffs may be the beginning of the end.

Business Insider

01-05-2025

Meta reported $4.2 billion in losses from its Reality Labs division this quarter on Wednesday. Its total metaverse burn has now pushed past $60 billion since 2020.
Adding to the turmoil, Meta conducted layoffs in its Reality Labs division last week, primarily affecting teams that focused on VR gaming and the Supernatural VR fitness app, which Meta owns.
At least one analyst thinks the end is near.
"For now, Meta maintains two tales of one company," Forrester vice president and research director Mike Proulx told Business Insider. "Its Family of Apps continues to grow by the metrics that matter. But Reality Labs is a leaky bucket. Year-over-year, that division's revenue is down, and losses are up. I predict come end of this year, Meta will shutter its metaverse projects, like Horizon Worlds."
Horizon Worlds, Meta's social VR app in which users interact as avatars in shared digital spaces, was once the company's poster child for the metaverse. However, it has struggled to gain mainstream traction.
Over the 2024 holidays, Meta's Horizon app briefly topped app store charts — not because of surging interest in the metaverse, but because it's required to set up a new Quest headset. It signaled that the devices were a popular gift.
That momentum didn't stick. On this week's earnings call, Meta said Quest sales underperformed, dragging Reality Labs' revenue down 6% year-over-year.
On the call, Evercore analyst Mark Mahaney asked what might finally shrink those multibillion-dollar losses.
"There are more investments that I think make sense to make," Meta CEO Mark Zuckerberg responded, citing the growth of Meta's AI glasses and a vision to eventually sell tens of millions of units.
Internally, the stakes are high. Meta CTO Andrew Bosworth has said 2025 is the "most critical" year for the company's metaverse effort, warning staff that without real traction, the whole thing could go down as a "legendary misadventure."
Reality Labs, which includes the Quest headsets, Horizon Worlds, and Meta's Ray-Ban smart glasses, is structured into two units: Metaverse and Wearables. In January, Meta quietly reshuffled the division, moving top sales and marketing leads under broader company leadership to align more tightly with its AI push.
For now, Meta is still in the fight, though its momentum has clearly moved elsewhere: to its Llama AI models, Meta AI, and those Ray-Bans. The metaverse may not be dead yet, but it's no longer center stage.