Meta's Metaverse Ambitions Face Financial Scrutiny
Meta is reportedly contemplating substantial reductions in spending for its metaverse division, a significant shift for the company that rebranded from Facebook to Meta Platforms Inc. in October 2021 with the explicit goal of pioneering the next era of the internet through immersive digital experiences. The metaverse, envisioned as a shared, interconnected digital universe for social interaction, work, and entertainment, is primarily driven by Meta's Reality Labs division, responsible for developing its virtual and augmented reality hardware, software, and digital environments.
Challenges in Metaverse Adoption and Financial Performance
Despite a considerable financial investment exceeding tens of billions of dollars since 2021, Meta's metaverse initiatives have encountered difficulties in achieving widespread user adoption. The Reality Labs division has consistently reported substantial losses, with a reported $4.4 billion loss in the third quarter alone. In 2022, Meta attempted to bolster its metaverse strategy by integrating nonfungible tokens (NFTs) across Instagram and Facebook. This feature aimed to enable creators and users to mint, display, and trade NFTs, supporting various blockchains like Ethereum, Polygon, and Flow, with the stated intention of empowering digital artists and expanding economic opportunities within the creator economy.
However, the enthusiasm for NFTs waned significantly with the broader cryptocurrency market downturn in 2022, resulting in minimal user engagement and unclear monetization pathways. Consequently, by March 2023, Meta announced the discontinuation of all NFT-related projects. The company's strategic focus has since pivoted towards generative artificial intelligence (AI) and AI-powered consumer products, marking a departure from its initial strong emphasis on the metaverse narrative.
Deep Budget Cuts Anticipated for Metaverse Division
Recent reports indicate that Meta is now considering significant budget reductions for its metaverse division. According to Bloomberg, citing individuals familiar with the matter, the proposed cuts could amount to as much as 30% of the Reality Labs budget for 2026. This level of reduction would be considerably deeper than the 10% cuts mandated across most other departments within the tech giant.
Such a move would represent the company's most substantial strategic alteration since its rebranding in 2021. While Meta did not provide immediate comment on potential layoffs, insiders suggest that if approved, the restructuring could lead to job losses as early as January 2026, although final decisions are still pending. These proposals reportedly emerged during Meta's annual budget review sessions conducted in November 2025.
Reality Labs, the division spearheading Meta's immersive hardware and metaverse projects, has accumulated over $70 billion in cumulative losses since 2021. Sources close to the matter indicate that Meta's leadership is urging the unit to implement more aggressive cost-saving measures, acknowledging that the market's shift away from virtual worlds has occurred at a faster pace than the company had initially anticipated.
Decline in Crypto-Linked Metaverse Tokens
Investor sentiment surrounding the metaverse has not only cooled within major technology companies but has also significantly impacted the cryptocurrency markets. Tokens that were once closely associated with metaverse platforms have experienced substantial drops in value. Render (RNDR), formerly the largest metaverse-linked token, now has a market capitalization below $1 billion and has fallen outside the top 100 digital assets. At the time of reporting, RNDR saw a 1.36% decrease in the past 24 hours, trading at $1.71.
Sandbox (SAND) and Decentraland (MANA), which were initially positioned as leading metaverse platforms, are also trading in negative territory. SAND experienced a 1.34% overnight decline, while MANA dropped by 1.66%. According to CoinGecko, the total market capitalization of metaverse tokens currently stands at $3.3 billion.