Meta has closed multiple internal VR game studios. The closures include Twisted Pixel Games and Sanzaru Games, as layoffs continue across its Reality Labs division.
Developers from both studios began confirming job losses this week. Following reports that Meta is cutting roughly 10 percent of Reality Labs staff. The division houses Oculus Studios, Meta’s first-party VR game development arm, alongside its work on headsets, wearables, and metaverse-related projects.
Designer Andy Gentile, a longtime member of Twisted Pixel, posted that the entire studio had been shut down. That account was echoed by senior level designer Ray West. Who confirmed on LinkedIn that Sanzaru Games was also among the studios closed.
The closures appear to be part of a broader restructuring effort within Reality Labs, which has faced increasing pressure over costs and shifting company priorities.
Two Long-Running Studios With Deep Console and VR Roots
Twisted Pixel Games was founded in 2006. It became best known for its run of well-regarded Xbox Live Arcade titles, including The Maw, Splosion Man, Ms. ’Splosion Man, and Comic Jumper. The studio was acquired by Meta in November 2021. And, most recently released Marvel’s Deadpool VR for Meta Quest 3 in 2025.
Sanzaru Games was also founded in 2006. It built its reputation through ports and remasters of PlayStation games such as The Sly Collection, Secret Agent Clank, and God of War Collection. In 2019, the studio released Asgard’s Wrath on Oculus Rift. It was later acquired by Facebook, prior to the company’s rebrand as Meta.
Sanzaru went on to develop Asgard’s Wrath 2. The game launched as a bundled title alongside Meta Quest 3 in late 2023. And, it became one of the platform’s most prominent first-party VR releases.
Reality Labs Layoffs Follow Months of Budget Cuts
According to reporting from The New York Times, Meta has been planning significant workforce reductions within Reality Labs. The cuts are aimed primarily at metaverse-focused teams and VR platform development. The division reportedly employs around 15,000 people and has accumulated losses exceeding $70 billion since 2020.
Additional reporting has suggested that teams tied to Horizon Worlds, Meta’s social VR platform, were particularly impacted. Horizon Worlds expanded beyond VR to PC and mobile devices over the past two years. However, it struggled to gain traction against competitors such as Roblox, Fortnite, and Minecraft.
In December 2025, Meta reportedly shifted more budget toward AI research and smart glasses. The move reduced investment in VR platform expansion and third-party Horizon OS development.
“Most Important Meeting of the Year” Signals Strategic Shift
Meta’s Chief Technology Officer and head of Reality Labs, Andrew Bosworth, has called an all-hands meeting for January 14. He described it internally as the “most important” meeting of the year. Employees have been strongly encouraged to attend in person, an unusual move for the division.
The meeting follows multiple rounds of layoffs across Reality Labs over the past year, including cuts to Oculus Studios and the team behind Supernatural, Meta’s VR fitness app.
Meta has not publicly commented on the studio closures, but recent reporting indicates the company is continuing to pivot away from large-scale metaverse initiatives and toward AI development and wearables, including smart glasses and potential new lightweight VR hardware.
The State of Meta’s First-Party VR Games
The shutdown of Twisted Pixel and Sanzaru marks a significant contraction of Meta’s first-party VR game development footprint. Both studios were responsible for some of the platform’s most recognizable exclusive titles, particularly during the Quest 3 launch window.
While Meta Quest hardware reportedly performed well during the 2025 holiday season, the closure of established internal studios reflects a pullback in Meta’s first-party VR game development amid shifting company priorities.
For now, Meta’s focus appears increasingly centered on AI research and wearables, with VR gaming becoming a smaller part of the company’s long-term strategy.
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