Meta has closed three of its virtual reality game development studios – Twisted Pixel Games, Sanzaru Games, and Armature Studio – following a 10% reduction in its Reality Labs metaverse division workforce. This strategic move, confirmed by a Meta spokesperson and reported by Bloomberg, signals a significant reevaluation of the company’s ambitious metaverse investments, impacting hundreds of employees.
The closures come as Meta pivots its investment strategy, shifting resources from its broader metaverse initiatives towards the development of wearables. This redirection was initially announced last month, indicating a measured response to the substantial financial outflows associated with Reality Labs. The division’s operating loss reached over $4 billion in Q3 2024, highlighting the immense cost of building the metaverse, as detailed in Meta’s financial reports.
Acquired between 2020 and 2023, the shuttered studios were key players in Meta’s VR content ecosystem. Sanzaru Games developed ‘Asgard’s Wrath,’ Twisted Pixel Games worked on ‘Marvel’s Deadpool VR,’ and Armature Studio was responsible for the ‘Resident Evil VR’ port. Even Within, the developer behind the popular VR fitness app Supernatural, will cease production of new features and content, although support for its existing product will continue, as detailed by GamesIndustry.biz.
The shifting sands of Meta’s metaverse strategy
This latest round of cuts, potentially affecting up to 1,000 employees within Reality Labs, underscores a more pragmatic approach from Meta regarding its long-term vision for the metaverse. While CEO Mark Zuckerberg remains committed to the foundational concept, the immediate focus appears to be on more tangible, near-term hardware advancements like augmented reality glasses and advanced VR headsets. The company aims to reinvest savings from these cuts into growing its wearables segment this year.
Industry analysts have long debated the viability and timeline of a fully realized metaverse. Early enthusiasm has been tempered by slow user adoption and the sheer technical challenges involved. Reports from Bloomberg indicated an internal memo outlining these changes, with former employees like Andy Gentile from Twisted Pixel and Ray West from Sanzaru confirming the closures on social media, expressing disappointment but also understanding of the business realities.
The future of VR content and Meta’s hardware push
The closure of these studios raises questions about the future of first-party VR content development under Meta. While the company still owns other studios and invests in third-party titles, the consolidation suggests a more selective strategy for internal game creation. The emphasis is clearly on driving adoption through compelling hardware, such as the Meta Quest line, which has seen continuous innovation and market presence.
The Federal Trade Commission (FTC) had previously opposed Meta’s acquisition of Within, citing concerns about potential monopolization in the VR fitness space. Despite these regulatory hurdles, Meta proceeded with the acquisition in 2023. The subsequent decision to scale back content development for ‘Supernatural’ might reflect broader strategic shifts rather than a direct consequence of past regulatory scrutiny, though it highlights the complex landscape Meta navigates, as documented by the agency’s public records.
Meta’s decision to streamline its VR content operations and reduce Reality Labs staff signifies a recalibration of its metaverse ambitions. The immediate future likely involves a stronger emphasis on core hardware development and a more targeted approach to content, aiming for sustainable growth rather than broad, costly expansion. This shift, while painful for those affected, could pave the way for a more focused and ultimately more successful integration of VR and AR technologies into everyday life.
