VR experts say that Meta’s pullback is “concerning” in the short term

Experts from the world of virtual reality have described Meta’s decision to close three studios and make layoffs to its metaverse-focused Reality Labs division as “concerning”.

Speaking to The Games Business, Owlchemy Labs’ Andrew Eiche said that the technology giant’s business aims were at odds with those of game development. Curran Games Agency’s Cassia Curran added that Meta wants its VR business to be “iPhone-sized”, not at a console scale.

“Meta’s goals are not aligned with the XR industry,” Eiche said.

“Their goal is not to make XR as great as it could possibly be. Their goal is not to make the best industry. Their goal is to make social platforms and their goal is to do this in whatever way they can. So if suddenly the investment shifts to AI, XR hurts. And if they are the only game in town that’s making any real money, they control the fate of all these developers.”

Curran added: “Meta’s not interested in a game console business. They don’t want a Nintendo Switch-size business, they want an iPhone size business. That’s what they’re going for. Games is a sort-of stepping stone.”

Curran estimates that between 70% and 80% of all virtual reality revenue comes from the Meta store, meaning that the company’s decision to reduce focus on the VR business has a detrimental effect on developers in the space.

“In the short term, [Meta’s decision] is concerning to me,” Eiche said.

“But long term, less so. There’s a bunch of interesting devices and form factors coming down the pipeline. The problem is we have to survive the short term to get to the long term.”

Both Eiche and Curran are optimistic long-term, pointing to new virtual reality tech; Google is working on Android XR, while Valve is set to launch its new Steam Frame headset.

“That’s why the long term is brighter because there is legitimate competition coming,” Eiche said.

“We all just have to make it through 2026 first.”

Curran added: “VR is not dead. VR games are too cool to die. There is a reasonably-sized core of VR gamers who are really passionate. There’s also, in the last year and a half, a new audience segment. The Roblox generation have really jumped in. The Quest 3S headset was very affordable and data suggests that 33% of US teens own a headset. So, [VR] has quite deep market penetration amongst a certain age group. And you see that with how certain games do well, and certain games haven’t.”

Meta shut down three VR studios earlier this month as part of cuts to its Reality Labs arm. Twisted Pixel, Sanzaru and Armature Studio were all closed.

Since rebranding from Facebook to Meta in 2021, the company has more than $70 billion on its metaverse plans.