According to Meta’s recent quarterly earnings report, Quest headset sales are declining, however AI glasses are growing fast enough to partially offset a slump in Reality Labs revenue. And moving forward, the company says only the “major” VR breakthroughs will warrant productization.
The News
“Within our Reality Labs segment, Q3 revenue was $443 million, down 6% due to lower Quest headset sales, which were partially offset by continued strong growth in AI glasses revenue,” Meta CFO Susan Li said during the company’s Q3 2026 earnings call last week.
While only a snapshot, the figures offer insight into Meta’s shifting hardware priorities. When the company announced it was effectively pivoting Reality Labs to focus more on wearables and AI, making its consumer VR hardware and metaverse ambitions less of a priority, it was clear times were changing for the company—and the VR industry at large.
That shift is also set to effect future VR hardware, with Meta ostensibly stepping back from regular generational upgrades.
“We are changing our approach to virtual reality to only ship new devices when we have major breakthroughs like we had with the Meta VR Glasses this year,” Zuckerberg said, echoing statements made at Meta’s Connect developer conference in September, which proved to be dominated by the company’s advancements in AI.
But Zuckerberg hasn’t given up on VR. He still believes in its long-term potential, although the AI race has taken precedent.
“I continue to believe that the path to delivering the holographic experience of bringing together the physical and digital worlds in everyday glasses will come through VR first, but we will pace this aspect of our investment more to focus on delivering personal superintelligence first,” Zuckerberg continued.
Now, with Meta VR Glasses due to launch in Spring 2027, which is set to appeal to prosumers and professionals at $1,300, the company’s next bet in VR hardware is looking distinctly more like a stepping stone to augmented reality.
My Take
What’s less clear is where the company’s game-focused Quest platform fits in all of this, as Meta is now effectively holding off on iterative VR hardware releases as it targets a different audience with Meta VR Glasses.
Hypothetically speaking though, the company could offer up massive discounts on Quest 3 & 3S around the holiday season in an attempt to make up for slower than usual VR hardware sales throughout the year.
Still, I wouldn’t bet on a temporary bump in hardware revenue to change Meta’s mind on consumer VR though, as it’s effectively pulled a majority of funds dedicated to big, expensive VR content earlier this year with no apparent plans to resume—generally not something you do if you’re betting on the long-term health of a VR console platform.
Check out our recent article on What Meta VR Glasses Mean for the Future of Quest to learn more.
