Meta Shuts Down Three VR Studios in Strategic Pivot

Meta has shuttered three virtual reality development studios in a significant strategic shift that signals the company's evolving priorities in the immersive technology space. The closures affect studios responsible for some of the platform's most acclaimed titles.

The decision represents a major consolidation of Meta's in-house VR development efforts and comes as the company publicly commits to redirecting resources toward wearable technology initiatives.

The three shuttered studios each brought distinct strengths to Meta's VR portfolio. Armature was instrumental in porting the critically acclaimed Resident Evil 4 to Quest in 2021, demonstrating technical prowess in adapting major franchises for virtual reality.

Sanzaru earned recognition for developing Asgard's Wrath, a sprawling action-RPG that showcased the narrative potential of VR gaming. The studio's closure marks the end of what many considered one of the platform's most ambitious exclusive titles.

Perhaps most immediately visible to consumers is the shutdown of Twisted Pixel, which had just released Marvel's Deadpool VR in November. Employees from both Twisted Pixel and Sanzaru confirmed the closures through social media posts.

Beyond the studio closures, Meta also announced that Supernatural, a leading VR fitness application, will no longer receive new content updates. The company stated that the current version will continue to function and receive support, but no additional workout content will be developed.

Meta's official explanation for the closures centers on a fundamental reallocation of resources. According to a company spokesperson, these moves align with last month's announcement about shifting investment focus from Metaverse development to Wearables technology.

We said last month that we were shifting some of our investment from Metaverse toward Wearables. This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.

The timing of these closures follows a pattern of Meta pulling back from various metaverse initiatives. Last month, the company paused planned Horizon OS headsets from manufacturing partners Asus and Lenovo, indicating a broader retrenchment strategy.

Notably, Meta has not announced any new VR headsets since the Quest 3S launched in 2024, suggesting the company is consolidating its hardware roadmap while it restructures its software and content development strategy.

The studio closures raise significant questions about Meta's long-term commitment to the VR ecosystem. The company has invested billions of dollars in VR development over the past decade, building Oculus into a leading platform.

The decision to eliminate internal development studios while simultaneously pausing third-party hardware partnerships suggests a more cautious approach to metaverse investments. Industry observers note this could signal Meta is prioritizing profitability and sustainable growth over aggressive expansion.

However, the move may also reflect market realities. VR adoption has progressed more slowly than initially predicted, and the metaverse vision that drove Meta's rebranding in 2021 has faced both technical and cultural headwinds.

The Supernatural decision is particularly telling. VR fitness apps have been among the most commercially successful categories, yet Meta is discontinuing content updates even for proven performers, suggesting a broader retrenchment across all VR content categories.

Despite the significant workforce reductions and studio closures, Meta is publicly maintaining that it remains committed to gaming and VR content development. The company's internal messaging emphasizes a strategic shift rather than a withdrawal.

Tamara Sciamanna, Director of Oculus Studios, addressed the changes in an internal memo, framing the decision as a pivot toward sustainable partnerships rather than an abandonment of the gaming category.

These changes do not mean we are moving away from video games. With this change we are shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability.

This messaging suggests Meta intends to maintain a platform operator role rather than a content creator, potentially mirroring strategies used by other console manufacturers who rely heavily on third-party studios for exclusive content.

The emphasis on long-term sustainability indicates Meta is taking a more measured approach to VR investment, prioritizing partnerships that can demonstrate clear paths to profitability.

Meta's decision to close three VR studios represents a defining moment for the virtual reality industry. It signals that even well-funded metaverse initiatives must demonstrate clear business value to survive.

Key questions remain about what this means for VR consumers. Will third-party developers fill the content gap left by Meta's internal studios? Can the platform maintain momentum without first-party exclusives? And how will the wearables strategy manifest in concrete products?

For now, the VR industry faces a period of uncertainty. Meta's pivot suggests the company believes in VR's future but is recalibrating its approach to get there. The savings from these closures will reportedly be reinvested in wearables, but whether that includes VR headsets or focuses on other wearable categories remains to be seen.

What is clear is that the era of unlimited metaverse spending has ended. Meta, like the broader tech industry, is searching for sustainable models in immersive technology—models that balance innovation with financial reality.