Meta retains ‘optimism’ in VR despite massive Reality Labs losses

It could be beneficiant to say Meta’s incursion into the combined actuality market has underwhelmed.

The corporate’s Reality Labs division—which homes plenty of sport studios and the corporate previously generally known as Oculus (you already know, the one which makes Quest headsets)—recorded an annual lack of $19.19 billion throughout the fiscal yr ended December 31, 2025. Income was additionally down 12 percent-year-on yr. 

Which means the division has misplaced roughly $83.55 billion over the previous six years. 

This is how these losses panned out, for context: 2020 ($6.62 billion), 2021 ($10.19 billion), 2022 ($13.71 billion), 2023 ($16.12 billion), 2024 ($17.72 billion), 2025 ($19.19 billion). 

Even supposing Reality Labs has develop into more adept at dropping cash than ushering in one thing even vaguely resembling the metaverse, Meta has remained bullish in regards to the prospects and potential of the division. 

In 2023, Meta CEO Mark Zuckerberg acknowledged investor “discomfort,” however counsel the division represented a “very long-term wager” that required massive funding in order to unravel technical hurdles that might make gadgets extra viable. 

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“I can not assure you that I’ll be proper about this wager,” added Zuckerberg on the time, in what was a decidedly prophetic snippet. 

The place does Meta’s digital actuality enterprise go from right here?

Certainly, layoffs have develop into commonplace inside Reality Labs, with Meta commonly trimming its workforce whereas intimating its long-term plan was lastly coming collectively. 

But, mere weeks earlier than asserting its newest last outcomes, the corporate shuttered a number of VR studios housed inside Reality Labs, together with Asgard’s Wrath developer Sanzaru Video games, Deadpool VR maker Twisted Pixel Video games, and Resident Evil 4 VR developer Armature Studio. 

The corporate additionally laid off plenty of workers at Batman: Arkham Shadow developer Camouflaj—reportedly leaving the studio with a “handful” of staff. 

So, the place does that depart the division? Based on Meta CFO Susan Li, the corporate nonetheless has loads of “optimism in the way forward for VR” and can make investments frequently in the market. 

That mentioned, Li additionally mentioned “client adoption of VR has usually been on a slower development path than wearables,” which suggests Reality Labs should rebalance its portfolio. 

“So, we’re meaningfully lowering our funding in VR and Horizon this yr, however we’re rising our funding in wearables to capitalize on the momentum that we’re seeing in our place as a market chief. That is the form of the rebalancing of the portfolio to this point,” she added throughout an incomes name. 

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Meta’s newly-filed 10Q kind offers extra specifics. It notes that Reality Labs will spend roughly 70 p.c of its working bills on wearables initiatives equivalent to AI glasses, and simply 30 p.c on VR and Horizon initiatives—the latter of which incorporates Meta Quest headsets and software program. 

As for the losses? They give the impression of being set to proceed. “I count on Reality Labs losses this yr to be much like final yr, and it will probably be the height as we begin to regularly cut back our losses going ahead,” mentioned Zuckerberg on an earnings name.