Meta’s Reality Labs division is shifting focus from VR to wearables, despite continued development of future VR headsets. The company confirmed a significant reduction in VR investment this year, while increasing spending on wearables like smart glasses. This strategic pivot follows substantial losses in Reality Labs, with a projected peak in 2026 before expected declines. Meta’s CFO Susan Li has confirmed that the company is still “building future headsets” and maintains “optimism in the future of VR” — but not before making it clear that wearables, not virtual reality, will drive Reality Labs spending going forward.Li made the comments during Meta’s Q4 2025 earnings call, responding to a Deutsche Bank analyst who asked whether Reality Labs would narrow its focus to wearables. Her answer: not entirely, but mostly yes.”We are meaningfully reducing our investment in VR and Horizon this year, but we’re growing our investment in wearables,” Li said.
Meta’s Reality Labs lost $19.2 billion in 2025 alone, taking total losses past $83 billion since 2020
The numbers paint a stark picture. Reality Labs pulled in just $2.2 billion in revenue for fiscal 2025 while burning through $19.2 billion in operating costs. That’s an 8.3% jump in losses compared to the previous year. Since its inception in 2020, the division has now bled over $83 billion — with just $11.8 billion in total revenue to show for it.Earlier this month, Meta cut roughly 1,500 jobs from the division — about 10% of its staff. Three VR game studios were shut down, the Batman: Arkham Shadow sequel got cancelled, and Horizon Workrooms was retired.
Ray-Ban Meta smart glasses tripled in sales while Quest headset numbers dipped
The contrast between VR and wearables couldn’t be sharper. Quest headset sales fell in 2025, while Ray-Ban Meta smart glasses sales more than tripled. Meta even had to delay the international rollout of its Ray-Ban Display glasses because US demand outstripped supply.CEO Mark Zuckerberg told investors he sees AI glasses as “the main way that we integrate superintelligence into our day-to-day lives.” Quite a shift from the metaverse pitch that got Facebook renamed in 2021.
Meta expects Reality Labs losses to peak in 2026, with reductions starting in 2027
Li told investors that 2026 losses should be roughly flat compared to 2025, and the company expects them to start declining in 2027. Zuckerberg framed it as VR becoming “a profitable ecosystem over the coming years.”As for those future headsets Li mentioned — leaked memos from December suggest Meta is working on both an ultralight tethered headset and a traditional Quest 4 focused on gaming. The latter reportedly won’t arrive before late 2027 and will carry a higher, unsubsidized price.The metaverse dream isn’t dead. It’s just on a very tight budget now.