Just over four years after Facebook rebranded as Meta (META), the company is pulling back sharply from its virtual reality push, heading toward AI. The move marks a clear shift away from the metaverse vision that once defined the company’s future.

Meta has begun laying off employees tied to virtual reality projects inside its Reality Labs division. More than 1,000 roles are affected, or about 10% of the hardware group that builds Quest headsets and runs the Horizon Worlds virtual social platform.

Several internal game studios are also being shut down. People familiar with the matter said the closures include Armature Studio, Twisted Pixel, Sanzaru and a technical group called Oculus Studios Central Technology. Other teams, including Ouro Interactive, are seeing job cuts.

Reality Labs chief technology officer Andrew Bosworth is expected to address staff in an all-hands meeting this week. Meta confirmed the layoffs but declined to comment on specific studios.

The changes come as Meta increases spending on artificial intelligence, which has become chief executive Mark Zuckerberg’s top priority.

Meta has spent heavily to build its AI group. In June, the company paid $14.3 billion to bring in Scale AI founder Alexandr Wang and other researchers. In October, longtime metaverse leader Vishal Shah moved into a new role running AI products.

The company also raised its projected 2025 capital spending to as much as $72 billion and said growth would accelerate in 2026.

Some virtual reality products are being scaled back rather than shut down. Supernatural, a VR fitness app acquired for $400 million in 2023, has been placed into maintenance mode with no new content planned.

Meta said in December it would redirect Reality Labs funding from VR toward AI-powered glasses and wearables. A spokesperson said savings from the changes will support growth in those areas.

Despite the pullback, Meta is not exiting VR entirely. The company is encouraging developers who build games for Roblox to create mobile-friendly experiences for Horizon Worlds, which has struggled to attract users. After years of losses and strategic pivots, the layoffs highlight how Zuckerberg prioritizes AI as Meta reshapes its future.