Internal sources indicate that the discussion revolves around reducing operating expenses, including payments made to external studios working on developing games for the “Horizon” platform. Employees are concerned that these cuts will extend to jobs, although the company has confirmed that the bulk of the reductions will affect operating costs and not “wider changes.”
This decision comes after the “Reality Labs” unit incurred losses exceeding $60 billion since 2020, while Meta is increasing its spending on AI infrastructure. Analysts estimate that reducing the metaverse budget by this amount could save between $4 and $6 billion in 2026 and raise 2027 earnings forecasts by several percentage points, especially if this trend towards reducing spending extends to the rest of the company’s divisions.
These changes are a continuation of a restructuring process that has already begun within “Reality Labs,” and included changes in leadership and the transfer of senior officials to AI units, as well as an undisclosed number of layoffs in game studios and virtual reality application teams. This shift in strategy has been positively reflected in the company’s stock on the stock exchange, which rose by about 4% in a single session, adding about $69 billion to its market value.
It seems that Meta is ready to partially backtrack on its large investments in the metaverse, and instead focus on the artificial intelligence race, which seems more viable in the near term. The future of virtual reality and metaverse platforms within the company remains contingent on their ability to prove their effectiveness after years of financial losses. (Business Insider)
