According to reports, social media giant Meta plans to reduce spending on the metaverse by up to 30% and redirect funds towards virtual reality glasses and artificial intelligence.
No final decision has been made yet, but budget cuts and possible layoffs are possible at the Metaverse Reality Labs division, mainly focused on the virtual reality unit, which absorbs most of the expenses related to Metaverse, Bloomberg and The Fresh York Times reported ON Thursday.
Budget cuts could come as soon as January, but Meta plans to redirect resources to the Reality Labs unit that develops augmented reality glasses.
Wall Street reacted positively to the news, initially issuing shares of Meta (META). spikes over 5% at the market opening on Thursday, then oscillates around $661 and gains 3.4% during the day.
Meta changed its name from Facebook in 2021 with the intention of building a metaworld. It has committed billions of dollars to research and development of virtual reality technologies, and interest in them has waned as tech companies look to cash in on the hype surrounding artificial intelligence.
Competition around the metaverse is fun
Meta is hitting its virtual reality unit as part of its 2026 annual budget planning, in part because the anticipated gold rush around the technology hasn’t been as competitive as anticipated.
Sources told Bloomberg and The Fresh York Times that Apple and Google were furiously working on competing virtual reality devices in 2021, but the companies have since slowed their efforts, causing Meta executives to feel less pressure to move forward.
However, other companies are still working to launch metaverses, and artificial intelligence startup Infinite Reality acquired music piracy and streaming service Napster in March with plans to add a music-focused metaverse.
Related: The metaverse “continues to be vibrant” as NFT sales surged 27% in August.
Meanwhile, Donald Trump’s DTTM Operations company filed an application in February to register trademarks related to the Metaverse and NFT platform built around the American president’s brand.
Meta in virtual reality glasses
The meta may be cooling in the metaverse, but CEO Mark Zuckerberg said in: post on Wednesday on his X-like Threads platform that his company is opening a recent original studio in Reality Labs, focused on “design, fashion and technology.”
“We are entering a new era in which AI glasses and other devices will change the way we connect with technology and each other,” he said.
“The potential is huge, but the most important thing is that these experiences are natural and truly people-centered,” Zuckerberg said. “With this new studio, we are focused on ensuring that every interaction is thoughtful, intuitive and built to serve people.”
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