Meta just killed VR gaming. Three Oculus Studios – Twisted Pixel Games, Sanzaru Games, and Armature Studio – completely shuttered alongside 1,000+ Reality Labs layoffs representing 10% division-wide cuts. The pivot from metaverse to AI wearables guts first-party Quest development after $60 billion losses since 2020.
CTO Andrew Bosworth warned 2025 represented Reality Labs’ make-or-break year. Mission failed. Internal memo confirms ‘leaner VR organization’ prioritizing Ray-Ban Meta AI glasses over immersive headsets. Quest 4 reportedly delayed indefinitely.
Fallen VR Studios Legacy
| Studio | VR Hits | Pre-Meta Fame |
|---|---|---|
| Twisted Pixel | Deadpool VR (2025) | ‘Splosion Man, The Gunstringer |
| Sanzaru Games | Asgard’s Wrath 2 | Sly Cooper: Thieves in Time |
| Armature Studio | Resident Evil 4 VR | Metal Gear Solid HD ports |
Meta spokesperson Tracy Clayton confirmed cuts: “shifting investment from Metaverse toward Wearables.” Supernatural fitness app loses new content but existing version supported. Beat Games (Beat Saber) survives among survivors.
Meta’s VR Retreat Timeline
- 2020: Sanzaru acquisition post-Asgard’s Wrath
- 2022: Twisted Pixel, Armature bought
- 2024: Ready at Dawn closure (Lone Echo, Echo VR)
- 2025: Unit 2, Downpour Interactive shuttered
- Jan 2026: Triple studio annihilation
Financial Black Hole Exposed
Reality Labs losses:
- 2020-2024: $50+ billion
- Horizon Worlds: 200K peak MAU
- Quest 3: Underperformed sales targets
- Ray-Ban Meta glasses: Actual revenue generator
Meta now courts Roblox developers for Horizon Worlds content while pausing Asus/Lenovo Horizon OS partnerships. Oculus Studios director Tamara Sciamanna claims third-party support continues despite first-party extinction.
Dev Heartbreak Goes Viral
“Several Meta game studios were closed today, including Sanzaru. Amazing team.”
– Ray West, Sanzaru senior level designer
“Due to unexpected closure of Sanzaru Studios, I’m open for work.”
– Tyler Fluharty, Sanzaru lead environment artist
LinkedIn floods with VR veterans. Asgard’s Wrath 2 earned universal acclaim as Quest’s technical showcase. $100M+ development costs vaporized overnight.
VR Market Death Spiral
- PSVR 2: Commercial disaster
- Quest 3: Missed sales expectations
- Apple Vision Pro: $3,500 niche
- SteamVR: Flat user growth
- Pico 4: China-only success
FAQs
Quest headsets discontinued?
Hardware continues at reduced pace. First-party games gutted, third-party publishing emphasized. Quest 4 reportedly shelved.
Existing VR games supported?
Deadpool VR, Asgard’s Wrath 2, RE4 VR playable without updates. Beat Saber, Population: One survive. Supernatural frozen.
Meta abandoning VR completely?
No – mobile metaverse prioritized over standalone headsets. Roblox-style experiences replace AAA Quest exclusives.
Why $60B failure?
Horizon Worlds never exceeded 200K MAU. Quest never mainstream. AI glasses generate revenue VR couldn’t touch.
Developer job prospects?
VR talent floods market. Beat Games hiring unlikely. Flat industry absorbs limited headcount.
Quest Store future?
Third-party focus. Roblox partnerships eyed for Horizon Worlds. No new first-party tentpoles expected.
Zuckerberg regret metaverse?
Pivot suggests yes. $60B sunk cost funds AI wearables instead. Reality Labs restructured for ‘sustainability.’
Metaverse Dream Dies
Meta’s VR annihilation proves Zuckerberg’s biggest gamble failed catastrophically. Three acclaimed studios – creators of Deadpool VR, Asgard’s Wrath 2 masterpieces – erased overnight. $60 billion vanished chasing mainstream VR that never materialized.
Reality Labs survives as AI glasses skunkworks. Quest becomes third-party showcase rather than first-party powerhouse. Industry’s best VR talent floods job market amid contracting sector. Metaverse becomes mobile Roblox clone. Gaming’s boldest experiment ends not with bang, but whimper.