Photographer: David Paul Morris\/Bloomberg <\/p>\n
(Bloomberg) — Meta Platforms Inc. is beginning to\u00a0cut more than 1,000 jobs from\u00a0the company\u2019s Reality Labs division, part of a plan to redirect resources from virtual reality and metaverse products toward AI wearables and phone features.<\/p>\n
Affected employees will be notified of the layoffs\u00a0starting Tuesday morning, according to an internal post from Chief Technology Officer Andrew Bosworth\u00a0that was reviewed by Bloomberg News. The cuts are expected to hit\u00a0roughly 10% of employees within the Reality Labs group, which has about 15,000 workers, Bloomberg reported earlier this week.<\/p>\n
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As part of the reduction, Meta is pivoting its metaverse efforts to focus on mobile devices, according to Bosworth\u2019s memo. The company is also planning to cut back on its virtual reality investments to make the business \u201cmore sustainable,\u201d Bosworth wrote.<\/p>\n
\u201cWe said last month that we were shifting some of our investment from metaverse toward wearables,\u201d a company spokesperson said. \u201cThis is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.\u201d<\/p>\n
WATCH: Meta Seeks to Increase Ray-Ban AI-Glasses Output, Will Cut Jobs <\/p>\n
Reality Labs houses Meta\u2019s hardware\u00a0and other futuristic product efforts, including VR headsets, AI glasses and virtual world products. But Reality Labs has lost more than $70 billion since the start of 2021 because\u00a0many of the investments aren\u2019t yet generating meaningful revenue.<\/p>\n
Underscoring Meta\u2019s increasing focus on AI, the tech company and EssilorLuxottica SA are discussing\u00a0potentially doubling production capacity for AI-powered smart glasses by the end of this year, people familiar with the matter said. Meta has suggested increasing annual capacity to 20 million units or more by the end of 2026, said the people, asking not to be named because the deliberations are private.<\/p>\n
The metaverse \u2014 a virtual world where people can\u00a0work, play and exercise \u2014 has been a particularly costly endeavor. Meta spent heavily to develop high-end VR headsets and digital features, like avatars, in preparation for heated competition with other tech firms.\u00a0That rivalry never materialized, and the metaverse hasn\u2019t\u00a0taken off in the way that Chief Executive Officer Mark Zuckerberg envisioned when he renamed the company Meta from Facebook in 2021.<\/p>\n
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Meta shares were down 1.9% at about 10 a.m. New York time on Tuesday.<\/p>\n
In December, top executives discussed budget cuts as deep as 30% for the metaverse group,\u00a0aiming to adjust budgets and funnel more money toward other projects, like AI glasses. Meta has partnered with EssilorLuxottica SA to develop a number of AI-powered\u00a0spectacles\u00a0with brands like Ray-Ban and Oakley. Zuckerberg has said those glasses are performing better than expected, and they remain a key part of his plans to increase adoption of Meta\u2019s AI assistant.<\/p>\n
Meta will continue to develop the metaverse, but with a focus on mobile phones instead of the fully immersive VR headsets that the company initially imagined. The team building metaverse software experiences, now called Horizon,\u00a0will \u201cdouble down on bringing the best Horizon experiences and AI creator tools to mobile,\u201d Bosworth wrote. \u201cWith the larger potential user base and the fastest growth rate today, we are shifting teams and resources almost exclusively to mobile to continue to accelerate adoption there.\u201d<\/p>\n
Meta will also keep investing in VR headsets and features, but less aggressively.<\/p>\n
\u201cStarting today, VR will operate as a leaner, flatter organization with a more focused road map to maximize long-term sustainability,\u201d Bosworth wrote.<\/p>\n
Meta is closing down three of its in-house VR game and content studios as part of the cuts, according to a separate internal memo reviewed by Bloomberg.\u00a0According to the memo, the studios closing include Armature, known for its conversion of Resident Evil 4 to VR;\u00a0Sanzaru, which makes titles including Asgard\u2019s Wrath and Marvel Powers United;\u00a0and\u00a0Twisted Pixel, which makes Deadpool VR and Defector, among other games.\u00a0Supernatural, the VR fitness studio, will continue to support the existing product, but will stop developing new content and features, the memo said.<\/p>\n
Meta still has five other content and gaming studios, including\u00a0Beat Games,\u00a0BigBox,\u00a0Camouflaj,\u00a0Glassworks, and\u00a0OURO.<\/p>\n
\u201cThese changes\u00a0do not\u00a0mean we are moving away from video games,\u201d wrote Tamara Sciamanna, director of Oculus Studios, in the internal memo. \u201cGaming remains the cornerstone of our ecosystem. With this change we are shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability.\u201d<\/p>\n
–With assistance from Daniele Lepido and Antonio Vanuzzo.<\/p>\n
(Updates with details about Meta\u2019s plans to close several game and content studios.)<\/p>\n
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