In a series of interviews at Davos, Meta's CTO explained why the company is reducing its investment in VR.

If you somehow missed it: last week Meta shut down three of its acquired VR game studios, conducted significant layoffs at a fourth, canceled the Batman: Arkham Shadow sequel, and announced the shutdown of Horizon Workrooms and its Quest headsets for business offering. These actions came a month after the company officially confirmed "shifting some of our investment from Metaverse toward AI glasses and Wearables".

Palmer Luckey: Meta Isn’t Abandoning VR, Studio Closures “A Good Thing”

Palmer Luckey thinks Meta closing its VR game studios is “a good thing for the long-term health of the industry”, and that the narrative of it “abandoning” VR is “obviously false”.

UploadVRDavid Heaney

At the World Economic Forum in Davos, Meta CTO Andrew Bosworth has finally made public statements about the VR layoffs and shutdowns, via a series of interviews.

One of the interviews was with veteran tech reporter Alex Heath. While Heath hasn't yet shared the interview (this is set to happen in the coming days), he has published an article with key quotes wherein Bosworth declares that "VR is growing less quickly than we hoped".

“We’re still continuing to invest heavily in this space, but obviously, VR is growing less quickly than we hoped,” Bosworth apparently told Heath. “And so you want to make sure that your investment is right-sized.”

According to Heath, Bosworth claimed that Meta has seen “really, really positive pickup” in Horizon Worlds on smartphones, and plans to double down on this with continued investment in Horizon on mobile.

“You've got a team that actually has product market fit in a huge market on mobile phones, and they're having to build everything twice. They're building it once for mobile phones, and building again for VR. There's a pretty easy way to increase their velocity: just let them build for mobile. So Horizon is very focused now on mobile — not exclusively, but almost exclusively,” Bosworth is quoted as saying.

Another interview, available in full on YouTube, was conducted by Axios' chief technology correspondent Ina Fried.

In it, Bosworth gave a very similar explanation for Meta's shift in strategy.

"It's like any investment, you're gonna look at how you do over the course of years and you're gonna reinvest in some areas and trim your losses in others.

For us, we're seeing tremendous growth of our metaverse on mobile. You know, Horizon is this thing that started on VR headsets. But obviously there's much more users today on mobile phones. We've been pivoting over the last year to focus on the mobile market and it's going really well, and so you kinda wanna double down on that."

Bosworth also seemed to suggest that Meta's significant investment in the VR side of Horizon Worlds, and repeated pushes to convince Quest headset wearers to use it, came at "an expense of user experience".

"We're gonna let VR be what it is, what it does", Bosworth said. "We're gonna have focus a lot more on the third-party content library, the ecosystem that's developed there."

That seems to suggest that Meta will pull back on pushing Horizon Worlds for VR users and on making its own content, leaving the content ecosystem to third-party developers and letting headset owners choose the content they want.

Palmer Luckey thinks Meta closing its VR game studios is "a good thing for the long-term health of the industry", and that the narrative of it "abandoning" VR is "obviously false".

If you somehow missed it: last week Meta shut down three of its acquired studios – Twisted Pixel Games (Deadpool VR), Sanzaru Games (Asgard's Wrath), and Armature Studio (Resident Evil 4 VR) – and conducted significant layoffs at a fourth: Camouflaj (Batman: Arkham Shadow).

The closures are part of Meta's wider strategy of, in its own words, "shifting some of our investment from Metaverse toward AI glasses and Wearables", and the layoffs have affected around 10% of Meta's Reality Labs division, around 1500 people.

Meta Closes Deadpool VR, Asgard’s Wrath & Resident Evil 4 VR Studios

Meta has shut down Twisted Pixel Games (Deadpool VR), Sanzaru Games (Asgard’s Wrath), and Armature Studio (Resident Evil 4 VR), UploadVR can confirm.

UploadVRDavid Heaney

This strategy shift has led some in the industry to speculate that Meta is abandoning VR entirely. But Oculus founder Palmer Luckey doesn't agree.

In a post on X, Luckey argued that last week's events were "not a disaster", pointing out that Meta still employs more people working on VR than any other company "by about an order of magnitude".

Further, Luckey explains that "crowding out the rest of the entire ecosystem" by forcing third-party developers to compete with blockbusters like Batman and Deadpool games that cost more to make than they would ever return "doesn't make sense", suggesting that the end of this strategy will be "a good thing for the long-term health of the industry".

He further notes that while some of these titles are received well, others fail, revealing that Rock Band VR, a 2017 Oculus Rift exclusive, sold just 700 copies.

Here's Palmer Luckey's full statement:

"I have an opinion on the Meta layoffs that is contrary with most of the VR industry and much of the media, but strongly held.

This is not a disaster. They still employ the largest team working on VR by about an order of magnitude. Nobody else is even close. The "Meta is abandoning VR" narrative is obviously false, 10% layoffs is basically six months of normal churn concentrated into 60 days, strictly numbers wise.

The majority of the 1,500 jobs cut in Reality Labs (out of 15,000) were roles working on first-party content, internally developed games that competed directly with third party developers. I think this is a good decision, and I thought the same back when I was still at Oculus.

Change always sucks because people lose their jobs in the process, but in a world of limited resources, Meta heavily subsidizing their own (with money, marketing, placement, etc) at the expense of core technical progress and platform stability doesn't make sense. Crowding out the rest of the entire ecosystem, even less so. Every developer big and small, even the hyper-efficient ones, have had an extremely hard time competing with games developed by Meta-owned teams with budgets and teams that spend vastly in excess of earning potential. People will point out that these teams did an awesome job and got awesome reviews from critics and customers alike - yes, and fucked up though it is, that makes the problem even worse!

Some people will say "they should have just funded those developers as external studios rather than acquiring them, then!". Yes, I agree, but hindsight is 20/20. Do you think Oculus expected to only sell 700 copies of Rock Band VR after spending eight figures to make sure it was ready and awesome for Rift CV1 launch, to the point of bundling the guitar adapter with every single headset? Of course not, but sometimes you learn what the world actually wants from you the hard way.

TL;DR, I feel really bad for the people impacted, but this is a good thing thing for the long-term health of the industry, especially the ongoing incentives.

(Nobody at Meta knows I am making this post)"

Palmer Luckey’s Anduril Partners With Meta To Build Military XR Devices

Palmer Luckey’s Anduril is teaming up with Meta to build XR products for US and allied militaries, starting with the EagleEye AR/VR helmet.

UploadVRDavid Heaney

After being fired from Oculus by Facebook in 2017, Luckey founded Anduril, a defense firm that makes and sells drones, loitering munitions, interceptors, cruise missiles, sentry towers, and even unmanned submarines, as well as a software system that integrates them and other assets into a unified view of the battlespace. It was most recently valued at over $30 billion.

In 2024, Meta CTO Andrew Bosworth publicly apologized to Luckey, an apology which he also publicly accepted. And last year, Anduril and Meta announced a partnership to build XR products for US and allied militaries, starting with the EagleEye AR/VR helmet.

"The people acting like I am some stooge who will obviously agree with everything Meta does need to read a history book or something, jfc

Oculus had a strong internal mandate to NOT be Nintendo and instead build things that build the ecosystem. Returning to that is good."

In response to the idea that he was "stooge who will obviously agree with everything Meta does", Luckey suggests those under that belief read a history book.