Meta weighs 30% budget cut to its flagship unit

Meta is reportedly considering slashing spending on its metaverse division.

Meta’s metaverse division works on the company’s vision for a shared, immersive digital universe where people can socialize, work, play, and create through virtual and augmented reality technologies.

Announced alongside Facebook’s rebrand to Meta Platforms Inc. in October 2021, the project was designed to move the company beyond social media and into what CEO Mark Zuckerberg described as “the next chapter of the internet.”

At the core of Meta’s metaverse strategy is Reality Labs, the division responsible for developing its VR and AR hardware, software, and digital environments. 

Meta's metaverse fails to get traction

Despite investing tens of billions of dollars since 2021, Meta’s metaverse efforts have struggled to gain traction. User adoption has been modest. In the third quarter, Reality Labs reported $4.4 billion loss.

In 2022, Meta launched a major push into nonfungible tokens (NFTs), aiming to integrate digital collectibles across Instagram and Facebook as part of its broader metaverse vision. 

The feature allowed creators and users to mint, display and trade NFTs directly on their profiles, supporting blockchains such as Ethereum, Polygon and Flow. Meta framed the initiative as a way to empower digital artists and expand economic opportunities in the creator economy.

However, enthusiasm for NFTs declined sharply amid the crypto market downturn of 2022, leading to minimal user engagement and unclear monetization prospects. By March 2023, Meta announced it would wind down all NFT-related projects.

By 2025, Meta’s focus has shifted toward generative AI and AI-powered consumer products, signaling a move away from its once-dominant metaverse narrative.

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Budget cuts loom over metaverse division

Meta is now reportedly considering cutting down the budget for the metaverse division.

Citing people familiar with the discussions, Bloomberg reported on Dec. 4 that the budget cut can be up to 30%. Executives at the tech giant are reviewing plans that could reduce Reality Labs’ 2026 budget by nearly a third, far deeper than the 10% cuts requested across most departments.

If this happens, then it could be its biggest strategic shift since the company’s 2021 rebrand. Meta did not respond to TheStreet Roundtable's request to comments about layoffs at the time of reporting.

If approved, the restructuring could result in layoffs as early as January 2026, though insiders told Bloomberg that final decisions have yet to be made. 

The proposals reportedly emerged during Meta’s annual budget reviews held in November 2025.

Reality Labs, which houses Meta’s immersive hardware and metaverse projects, has posted more than $70 billion in cumulative losses since 2021. Sources briefed on the matter said Meta leadership is pushing the unit to consider sharper cuts as the broader market moves away from virtual worlds faster than the company anticipated.

Crypto-linked metaverse tokens crater

Investor sentiment around the metaverse has soured beyond Big Tech. In crypto markets, tokens once tied to metaverse platforms have collapsed in value.

Render (RNDR), the largest remaining metaverse-linked token, now holds a market cap below $1 billion and has fallen out of the top 100 digital assets. At press time, it had dropped by 1.36% in the past 24 hours, trading at $1.71.

Sandbox (SAND) and Decentraland (MANA) — once positioned as early metaverse leaders — were trading in red as well. SAND was down 1.34% overnight, while MANA had dropped by 1.66%. 

The total capitalization of metaverse tokens stood at $3.3 billion, as per CoinGecko. 

Related: AR, wearable technology will win the metaverse market