Social media giant Meta said it’s cutting more than 1,000 workers and closing several content studios as it focuses its efforts on artificial intelligence-powered wearables such as smart glasses.
The reductions are within Meta’s Reality Labs division where employees work on the metaverse, digital spaces where people socialize, work, learn and do other online activities.
Game development studios Armature, Sanzaru and Twisted Pixel are shutting down, Meta confirmed.
“We said last month that we were shifting some of our investment from Metaverse toward Wearables,” a company spokesperson said in a statement on Wednesday. “This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.”
The job cuts highlight how tech companies are responding to the frenzy surrounding AI that can generate text, images and other type of content.
The rising popularity of AI means that companies are also competing to sell new hardware beyond smartphones and trying to release more AI-powered tools quickly.
ChatGPT maker OpenAI teamed up with former Apple designer Jony Ive to build new AI-powered devices. The AI company also partnered with Mattel to build AI toys.
Companies have been trying to lure top talent with lucrative packages, but even employees working in AI haven’t been spared cuts.
Meta, based in Menlo Park, has been hit with several rounds of layoffs, including in a division that’s working on AI that surpasses human intelligence.
In October, Meta Chief AI Officer Alexandr Wang told its employees that reducing the team size meant “fewer conversations will be required to make a decision, and each person will be more load-bearing and have more scope and impact.”
Last year, the company also shed 3,600 jobs. Meta said at that time the company focused on cutting low-performers, though some laid-off employees disputed that characterization.
As of September, Meta had 78,450 workers, up 8% compared to the same period last year.
In the third quarter, Meta reported revenue of $51.2 billion. But Meta’s Reality Labs also posted a $4.4-billion loss in the third quarter. And Meta’s net income dropped 83% that quarter compared to the period a year earlier because of a one-time tax charge of $15.93 billion.
Meta owns popular social media platforms Facebook and Instagram and messaging apps WhatsApp and Messenger. But it’s been focusing heavily on smart glasses, taking on Google, Apple, Snap and other tech companies.
Partnering with Ray-Ban and Oakley, Meta sells smart glasses equipped with AI features so people can take photos, calls and ask questions without whipping out their smartphone. One of its glasses pairs with a wristband that allows people to send texts using subtle finger movements.
Meta also made big bets on the metaverse, investing heavily in developing virtual reality headsets where people can immerse themselves in digital worlds, play games and watch movies. The company, formerly known as Facebook, bought virtual reality headset maker Oculus for more than $2 billion in 2014 and also acquired studios that make VR content.
Tamara Sciamanna, director of Oculus Studios told employees in a memo that the company still plans to focus on video games, Bloomberg reported.
“Gaming remains the cornerstone of our ecosystem. With this change we are shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability,” the memo said.
CNBC reported that jobs were also being cut at studios such as Ouro Interactive, which builds games for Meta’s Horizon Worlds, where people interact with one another enough through digital avatars. Oura didn’t immediately respond to a request for comment.
While VR headsets haven’t become mainstream, Meta’s smart glasses are selling better than expected.
Meta’s website says its display glasses with a neural wristband might be unavailable to buy or sold out due to “high demand.” Last year, the company opened a new flagship store in West Hollywood to sell its AI wearables.
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