Meta CFO Susan Li says the company still has “optimism in the future of VR”, and confirmed that it’s still “building future headsets”.
Li made the comment during Meta’s Q4 2025 earnings call this week, in response to a Deutsche Bank analyst asking whether the Reality Labs division would have a “narrow focus on wearables”.
“However, consumer adoption of VR has generally been on a slower growth path than wearables, and we are rebalancing our Reality Labs portfolio to reflect this”, Li also said, reiterating what CTO Andrew Bosworth declared in Davos last week.
“So, we are meaningfully reducing our investment in VR and Horizon this year, but we’re growing our investment in wearables to capitalize on the momentum that we’re seeing in our position as a market leader”, she continued.
Meta first officially confirmed this shifting spending strategy in December. Then, earlier this month the company shut down three of its acquired VR game studios, conducted significant layoffs at a fourth, canceled the Batman: Arkham Shadow sequel, and announced the shutdown of Horizon Workrooms and its Quest headsets for business offering.
That decision came after 2025 saw Quest headset sales decrease compared to 2024, while Ray-Ban Meta smart glasses sales tripled.
Meta Confirms “Shifting Some” Funding “From Metaverse Toward AI Glasses”
Meta has officially confirmed “shifting some of our investment from Metaverse toward AI glasses and Wearables”, following reports of an up to 30% budget cut for parts of Reality Labs.
Earlier in the Q4 earnings call, Mark Zuckerberg told investors that the company’s reduction in spending would make VR “a profitable ecosystem over the coming years”.
The Reality Labs division of Meta, which handles VR, Horizon Worlds, and smart glasses, recorded record spending in Q4, just shy of $7 billion. Given revenue of just under $1 billion, that resulted in a “loss” of around $6 billion.
Reality Labs continues to be heavily focused on research and development, though, and much of this “loss” is actually the spending towards developing true AR glasses, the “holy grail” consumer tech product that companies like Apple, Meta, and Google believe will define the next wave of personal computing.
Zuckerberg told investors to expect Reality Labs losses to finally peak in 2026, with Li stating that it’s Meta’s “expectation” that the losses will start to decrease in 2027, depending on how the market develops.
Meta Delays Ultralight Headset, Starts Work On Gaming-Focused Quest 4
Meta is delaying its ultralight headset with a tethered puck to the first half of 2027, and, separately, starting work on a gaming-focused Quest 4, leaked memos reveal.
As to the “headsets”, plural, that Susan Li was referring to, leaked internal memos from early December revealed that in addition to the widely reported ultralight headset with a tethered puck, Meta was also now working on a traditional new Quest focused on “immersive gaming”.
The memo indicated that the headset, which wouldn’t be expected until late 2027 at the very earliest, should bring a “large upgrade” over Quest 3, but no longer be subsidized, carrying a higher price. That tracks with Zuckerberg’s reference to VR becoming “profitable” for Meta “over the coming years”.
Many in the industry have speculated that this headset may have already been canceled in the wake of Meta’s other VR cuts, but Li’s reference to “headsets” may suggest it’s still in the works. Only time – or yet another leak – will tell.
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