Meta burned $19 billion on VR last year, and 2026 is shaping up much the same

Earlier this month, Meta cut roughly 10% of the workforce at Reality Labs, its virtual and augmented reality unit, a move that reportedly affected up to 1,000 employees. Shortly afterwards, the company disclosed financial results that helped explain the scale of the layoffs.

According to Meta's earnings report released Wednesday, Reality Labs recorded losses totalling approximately $19.1 billion in 2025. That figure represents an increase from the unit's 2024 losses, which stood at around $17.7 billion. In the fourth quarter alone, Reality Labs posted a loss of $6.2 billion.

Those losses far outpaced the unit's revenue. Reality Labs generated $955 million in sales during the fourth quarter and about $2.2 billion in revenue for the whole year in 2025, according to the report.

Despite mounting losses, Meta CEO Mark Zuckerberg expressed optimism during the company's earnings call, while acknowledging that the division's financial outlook remains challenging. Zuckerberg said Meta plans to focus much of its ongoing investment on smart glasses and wearable devices, while continuing efforts to expand Horizon across mobile platforms and eventually turn virtual reality into a sustainable business.

"For Reality Labs, we are directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on mobile and making VR a profitable ecosystem over the coming years," Zuckerberg said during the call. At the same time, he cautioned that near-term losses are expected to persist. "I expect Reality Labs losses this year to be similar to last year," he said, adding that 2026 would "likely be the peak, as we start to gradually reduce our losses going forward."

Meta's push into virtual reality began in earnest in 2021, when the company rebranded itself around the idea of building the "metaverse." From the outset, the strategy was met with scepticism. During its first year of heavy investment in VR, Meta faced widespread criticism, with some commentators labelling the effort an "international laughingstock." Nearly five years later, much of that scepticism remains.

As Reality Labs continues to post multibillion-dollar losses and Meta increasingly shifts its focus toward artificial intelligence, questions remain about what might ultimately revive the struggling VR business. Signs of retrenchment have become more visible in recent weeks.

Last week, CNBC reported that Meta plans to shut down several of its virtual reality studios, further suggesting a pullback from its earlier ambitions in the space. The company has also announced that it will retire its standalone Workrooms app, which was marketed as a virtual reality workspace for office employees to hold meetings and collaborate in immersive environments.

Together, the layoffs, studio closures, and continued losses underscore the uncertain future of Meta's virtual reality efforts, even as the company looks to reposition itself around AI and next-generation wearable technologies.