Meta to Cut Reality Labs Budget by 20% Amid Shift Towards New Product Launches

Meta is reportedly planning to reduce its budget for Reality Labs by approximately 20% from now until 2026. This decision comes despite the company experiencing a successful first quarter with earnings rising 27% year-over-year. Reality Labs is tasked with developing the hardware and software necessary for the metaverse, and this budget cut aligns with the company’s shift towards mass production in preparation for several major product launches in the near future.

According to analysts from Bank of America, the cost-cutting measures could save Meta about $3 billion. As the company gears up for its upcoming earnings call, expectations remain high. In the last quarter, Meta reported $36.45 billion in revenue, continuing its positive growth trend. However, Reality Labs faced a significant challenge, posting a loss of $3.8 billion during the same period. Some of these losses may not be directly related to the metaverse initiatives, as CEO Mark Zuckerberg indicated that a portion of Reality Labs’ resources is being redirected to support artificial intelligence projects.

George market analysts believe that the effectiveness of Meta’s strategy hinges on the acceptance of next-generation virtual and augmented reality products by consumers. The company is set to unveil new products, such as the Quest VR headset and Ray-Ban smart glasses, and is also developing a wrist-worn neural interface. Additionally, a prototype full-holographic headset is in the works, although its release timeline remains uncertain. As Reality Labs continues to adjust its approach, the reaction from investors and the market’s response to these upcoming launches could significantly influence the division’s viability going forward.