Meta's ambitious Reality Labs division, the very entity that prompted Facebook's rebranding to "Meta" in 2021, has reported a colossal financial hemorrhage of $19.19 billion in 2025. During the company's Q4 earnings call this week, the message to investors was stark and unvarnished: anticipate comparable losses throughout 2026 as well.
Zuckerberg Acknowledges Sustained Losses Despite Layoffs
CEO Mark Zuckerberg explicitly confirmed that Reality Labs' losses this year would mirror the 2025 levels. This forecast comes even after the recent layoff of approximately 1,500 employees from the metaverse-centric division earlier this month. The unit experienced its most disastrous quarter on record in Q4 2025, posting a loss of $6.02 billion against a mere $955 million in revenue.
Strategic Pivot: From VR Headsets to AI Glasses and Superintelligence
The employee reductions were accompanied by a significant strategic realignment. Meta is actively diverting investments away from virtual reality headsets and its underperforming Horizon Worlds virtual social platform. Instead, resources are being channeled toward developing AI-powered glasses and advanced wearable technology.
The company has shuttered three VR studios—Armature, Twisted Pixel, and Sanzaru—and placed its $400 million fitness application, Supernatural, into a "maintenance mode," significantly scaling back its development.
Ray-Ban Smart Glasses See Surging Demand
Zuckerberg's current focal point appears to be personal superintelligence delivered through smart eyewear. Sales of Meta's collaboration with Ray-Ban more than tripled last year, positioning AI-equipped glasses as the company's envisioned "ultimate incarnation" of future technology. The higher-end Ray-Ban Display glasses, which feature an integrated screen controllable via a wristband, have witnessed "unprecedented" consumer demand within the United States.
Horizon Worlds Undergoes Mobile-Focused Transformation
Rather than completely abandoning its virtual world ambitions, Meta is fundamentally reimagining the Horizon Worlds platform. The company is now aggressively recruiting developers from the popular Roblox ecosystem to create experiences for Horizon Worlds. The goal is to captivate younger audiences with kid-friendly, AI-generated games that can be easily shared across social media feeds.
Zuckerberg hinted at a future where users could generate entire games through simple text prompts and distribute them on Instagram or Facebook. He suggested that 3D experiences initially built for VR could, combined with AI advancements, eventually reach "hundreds of millions and billions of people" through mobile devices.
A notable omission from the entire earnings discussion was any mention of the term "metaverse," signaling a potential de-emphasis of the once-central branding concept.
