Meta weighs deep reductions to metaverse unit while sector’s crypto tokens collapse: report

Meta is considering its largest pullback from metaverse spending since its 2021 rebrand, with executives evaluating cuts of up to 30% across Reality Labs for 2026, according to a Bloomberg report citing people familiar with the discussions.

Meta’s internal planning reportedly says leadership is weighing significantly deeper reductions for the virtual-reality and metaverse teams than for the rest of the company. While most groups have been asked to find around 10% in savings, the unit responsible for Horizon Worlds and the Quest headset line is reviewing scenarios that would trim its budget by nearly a third.

If Meta settles on cuts of that scale, the restructuring could involve staff reductions early in the new year, though Bloomberg reports the plans are still being debated. These proposals surfaced during Meta’s annual budget reviews last month.

Shifting focus to AI

Reality Labs, the broader division housing Meta’s long-term hardware and immersive-tech initiatives, has racked up losses exceeding $70 billion since 2021.

People briefed on the talks told Bloomberg the metaverse team was pushed to consider more aggressive reductions because the company no longer sees the broader industry moving toward VR and virtual worlds as quickly as it once expected.

Meta CEO Mark Zuckerberg pushed back on speculation that Meta was drifting away from the metaverse throughout 2023 when enthusiasm started to wane, calling claims that his enthusiasm had shifted entirely to AI “not accurate.” But the years since have brought little traction for Horizon Worlds and mounting financial pressure on the division.

The possibility of reduced spending on the metaverse gave Meta’s stock an immediate lift. Shares, which closed Wednesday at $640, jumped as high as $674 in early pre-market trading Thursday before settling around $665 during the first hour of the session.

Zuckerberg has spent the past year shifting attention to generative AI models and the consumer hardware designed to support them.

The company’s recent push into AI-powered Ray-Ban smart glasses has become a far more tangible commercial story than its virtual-reality work. The devices have lifted sales for EssilorLuxottica, the company’s manufacturing partner, and have given investors a clearer line of sight into hardware that could generate returns sooner than the metaverse projects Meta once prioritized.

Metaverse sector collapse

Meanwhile, enthusiasm for metaverse platforms has also evaporated in crypto markets.

Render, the category’s largest token, has a market cap below $1 billion and no longer ranks among the top 100 digital assets despite its pitch as a decentralized network for 3D rendering and AI workloads.

Other tokens once promoted as metaverse leaders, including Sandbox and Decentraland, now trade near record lows.

The sector’s total market cap has collapsed to under $3.4 billion, down from more than $500 billion at the start of 2025, according to CoinGecko data.

© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.