Meta Shifts Strategic Focus: AI-Generated Feeds & Mobile Horizon Worlds Amidst Reality Labs Losses
Meta is strategically reorienting its focus towards artificial intelligence (AI)-generated social feeds and moving its Horizon Worlds platform to mobile devices. This significant shift, outlined by CEO Mark Zuckerberg, occurs as the company reports substantial operating losses within its Reality Labs division and implements recent workforce adjustments.
Strategic Emphasis on AI
Meta CEO Mark Zuckerberg indicated a strategic shift towards integrating AI into social feeds, stating his belief that AI will become the next major media format. He described an evolution from text to photos, then video, suggesting AI will enable new immersive and interactive media formats.
Zuckerberg anticipates Meta's applications will transition from algorithm-based content recommendations to AI that "understands" users, delivers personalized content, and can generate tailored content. This aligns with previous statements about adding a "huge corpus of content" to recommendation systems.
AI-Powered Features and Future ConceptsThe company has already implemented a "Vibes" feed within the Meta AI app, which features short, AI-generated videos. Zuckerberg also suggested future formats where users could create worlds or games using prompts, which could then be shared. He hinted at interactive videos that allow users to engage with content more meaningfully.
Revenue Streams and WearablesMeta plans to expand revenue streams through its Meta AI chatbot, with opportunities identified for "subscriptions and advertising." The company is also developing AI wearables and advancing its AI models. Zuckerberg predicted a future where most glasses are AI-enabled, noting that sales of Meta's glasses tripled in the last year.
Horizon Worlds Reorients to Mobile
Meta is shifting the focus of its virtual world, Horizon Worlds, from primarily virtual reality (VR) to mobile platforms. This strategic change aims to enhance competition with platforms such as Roblox and Fortnite, which offer user-generated experiences accessible on mobile devices.
A Meta representative stated that prioritizing mobile for Horizon Worlds is intended to access a larger market.
The company plans to leverage its existing social networks to connect synchronous social games with billions of users. Horizon Worlds, which initially launched in 2021 as a VR platform before expanding to web and mobile, will now be "almost exclusively mobile" and will "explicitly separate" its Quest VR platform from the virtual world. Samantha Ryan, Reality Labs’ VP of content, stated that Meta is well-positioned to deliver synchronous social games at scale.
Reality Labs: Strategic Shift and VR Hardware Commitment
During an earnings call, metaverse goals were not emphasized. Instead, Zuckerberg stated that investments in VR and Horizon Worlds would complement AI advancements by delivering these experiences via mobile. Meta CTO Andrew Bosworth has commented on this strategic shift. Reality Labs investments are reportedly shifting away from the metaverse towards AI.
Despite the reorientation of Horizon Worlds, Meta maintains its commitment to VR hardware. The company plans to continue developing VR hardware, with a "robust roadmap" of future VR headsets tailored to different audience segments, according to Samantha Ryan. Regarding VR software, Meta is concentrating on supporting third-party developers, noting that 86% of VR headset usage time is spent on third-party applications.
Financial Performance and Workforce Adjustments
Meta's Reality Labs division reported a significant operating loss of $6.02 billion in the final quarter of 2025. Since 2020, the Reality Labs division has accumulated losses of nearly $80 billion.
In response to these financial outcomes, Meta has implemented workforce adjustments. Earlier in the month, the company laid off at least 1,000 employees in the division, with other reports indicating approximately 1,500 employees, about 10% of the unit's staff, were laid off. Meta also closed three VR studios, described in some reports as "several." Additionally, the VR fitness app Supernatural, acquired by Meta in 2023, is reportedly transitioning to a maintenance mode, ceasing new content production.
For the final quarter of 2025, Meta reported overall revenue of $59.9 billion and a net income of $22.8 billion.