Meta Platforms Inc. (NASDAQ: META) has begun a significant workforce reduction, slashing over 1,000 jobs from its Reality Labs division. This move is part of a strategic plan to redirect resources towards artificial intelligence (AI) wearables and phone features, shifting away from virtual reality (VR) and metaverse products.
The company's extensive investment in the metaverse, which CEO Mark Zuckerberg once described as "the next chapter of the internet," has proven to be particularly costly for Meta.
Meta's Metaverse Initiatives Struggle for Traction
Since 2021, Meta has invested tens of billions of dollars into its metaverse initiative. Despite these substantial investments, the company has faced significant challenges in attracting meaningful user adoption. The Reality Labs division alone posted a $4.4 billion loss in the third quarter, highlighting the financial strain of these efforts.
Meta's ambitions in the metaverse extended to nonfungible tokens (NFTs). In 2022, the company launched features aimed at embedding digital collectibles across Instagram and Facebook as part of its broader virtual world strategy. These tools were designed to allow users and creators to mint, showcase, and trade NFTs on supported blockchains, including Ethereum (ETH), Polygon (POL), and Flow, with the stated goal of supporting artists and growing the creator economy.
However, this momentum waned rapidly as the crypto market experienced a downturn in 2022. Interest in NFTs declined, user engagement remained limited, and anticipated revenue opportunities failed to materialize. By March 2023, Meta officially confirmed the discontinuation of all NFT-related efforts. Subsequently, by 2025, the company's strategic priorities decisively shifted towards generative AI and consumer-facing AI products, marking a clear departure from its earlier metaverse narrative.
Crypto-Linked Metaverse Tokens Experience Decline
The news of Meta's strategic pivot has had an immediate impact on the cryptocurrency markets, with tokens previously tied to metaverse platforms experiencing a sharp decline.
Render (RENDER), identified as the largest remaining metaverse-linked token with a market capitalization of $1.15 billion, saw a 7.96% drop in value over the preceding 24 hours, trading at $2.21. Sandbox (SAND) and Decentraland (MANA), once prominent leaders in the metaverse space, also traded in negative territory. SAND was down 2.43% overnight, trading at $0.1243, while MANA had fallen by 1.97% to trade at $0.1478.
Other metaverse tokens also experienced losses. Stacks (STX), the second-largest metaverse token by market capitalization, fell by 3.12% to trade at $0.3787. Virtuals Protocol (VIRTUAL) was down by 5.51% to trade at $1.01.
At the time of reporting, the total market capitalization of metaverse tokens stood at $5.74 billion, reflecting a 4.11% decrease within a 24-hour period.
Reality Labs Workforce Reduction Affects Approximately 10% of Employees
The current round of job cuts is anticipated to affect approximately 10% of Reality Labs' workforce. The division currently comprises around 15,000 employees.
In an internal communication, Chief Technology Officer Andrew Bosworth reportedly stated that Meta will be refocusing its metaverse work on mobile platforms while scaling back virtual reality investments to enhance the business's sustainability. Employees impacted by these reductions are scheduled to be notified starting Tuesday morning, according to reports citing an internal company post from Bosworth.