Oculus Studios parent company Meta is reportedly shutting down three virtual reality game studios as it lays off around 10 percent of its VR/AR-focused Reality Labs division. Former employees began posting on X and LinkedIn today that they had been laid off, following yesterday’s reporting from the New York Times that the Mark Zuckerberg-led company would be cutting jobs as the company expands its work on artificial intelligence and wearable technology.
The three allegedly shuttered game studios are Asgard’s Wrath developer Sanzaru Games, Deadpool VR developer Twisted Pixel Games, and Resident Evil 4 VR developer Armature Studio. Meta (then Facebook) acquired Sanzaru Games in 2020. It purchased Twisted Pixel Games and Armature Studio in 2022.
A Meta spokesperson confirmed the closures in a statement to Game Developer. “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.”
One Twisted Pixel designer broadcast news of the closures on X, which was corroborated by a former Sanzaru Games colleague on LinkedIn.
Both studios have been recognized over the last few years for their work on VR games, having both been nominated for the Academy of Interactive Arts and Science’s DICE Awards (Sanzaru won the Immersive Reality Game of the Year prize at the 2024 ceremony).
Meta Reality Labs has been losing money and laying off workers
Meta Reality Labs’ entire existence has been marked by multi-billion dollar losses and annual layoffs since the division was formed in late 2021. In 2024 it made its first high-profile studio closure: Echo series developer Ready At Dawn.
This has been despite the achievements of many virtual reality game developers and successfully selling millions of Quest headsets. The losses were compounded by slowing interest in virtual reality devices and billions of dollars poured into building “the metaverse,” an all-encompassing virtual world at the heart of Meta’s 2021 name change.
That metaverse initiative led to the development of the online multiplayer game Horizon Worlds, which apparently struggled to attract the attention of even the developers working on it. It began pitching the game as a platform for teenagers in 2023.
In 2025, current and former Meta researchers accused the company of squashing reports of child abuse in Horizon Worlds, a charge Meta denied in a statement to The Washington Post.
