Meta burned $19 billion on VR last year, and 2026 won’t be any better

In a significant move earlier this month, Meta decided to reduce its workforce within Reality Labs, its virtual reality segment, by approximately 10%, resulting in the layoff of around 1,000 employees. This decision coincided with the company's disclosure of staggering financial losses in the VR sector, totaling about $19.1 billion in 2025. This figure surpasses the losses recorded in 2024, which were approximately $17.7 billion. Furthermore, the fourth quarter alone saw a loss of $6.2 billion, starkly contrasting with the unit's revenue of $955 million in Q4 and $2.2 billion for the entire year. During the earnings call held on Wednesday, Meta’s CEO Mark Zuckerberg conveyed a sense of cautious optimism regarding the future of the VR division. He indicated that the primary focus moving forward would be on developing glasses and wearables, while also striving to make Horizon a successful mobile platform. However, he acknowledged that losses in 2026 are anticipated to mirror those of the previous year, stating, "I expect Reality Labs losses this year to be similar to last year." Zuckerberg expressed hope that this year might mark the peak of losses, suggesting a gradual decrease in the future. Since the company’s pivot towards the metaverse in 2021, skepticism surrounding its VR endeavors has persisted. The initiative was met with criticism and was often described as an “international laughingstock” during its early stages. As Meta's VR business grapples with ongoing financial challenges, the company is also shifting its focus towards artificial intelligence, leaving many to wonder what steps will be taken to revitalize the struggling VR division. Recent reports from CNBC have revealed that, alongside the layoffs, Meta plans to close several of its VR studios, further indicating a declining interest in the virtual reality space. Additionally, the decision to retire the standalone Workrooms app—an ambitious VR meeting space for office workers—highlights the company's changing priorities.