Meta Shutters VR Studios and Halts Supernatural Development Amid Reality Labs Cuts

Meta is closing three VR game studios and ending new development for its fitness app Supernatural as part of broader Reality Labs restructuring affecting 1,000+ employees.

Meta has confirmed the closure of three VR gaming studios under its Reality Labs division, alongside halting all new content development for its VR fitness application Supernatural. The move impacts developers at Twisted Pixel Games (creators of Wilson's Heart) and Sanzaru Games (Asgard's Wrath series), both acquired by Meta in preceding years. This restructuring eliminates over 1,000 positions, as reported by Bloomberg and corroborated through developer social media posts.

What's Happening

Studio Closures: Twisted Pixel and Sanzaru are confirmed casualties, with a third unnamed studio also shutting down. Employees began sharing termination notices publicly on Tuesday.
Supernatural Status: The subscription-based fitness app (Supernatural) will remain operational but receive no future content updates or features. Existing workouts remain accessible.
Strategic Shift: Meta CTO Andrew Bosworth stated savings from layoffs will be redirected toward "wearables," signaling prioritization of hardware (Quest headsets, Ray-Ban smart glasses) over first-party VR content.

Context Behind the Cuts

This follows Meta's November 2025 announcement of a "leaner" Reality Labs, which lost $16.2 billion in the first nine months of that year. The division has historically struggled to monetize its metaverse investments outside hardware sales. Recent successes like the Ray-Ban Meta smart glasses (now targeting 20M+ units annually) contrast sharply with the underperforming VR software ecosystem.

Industry Implications

VR Content Drought: Meta funded major studios to drive Quest platform exclusives. With internal development scaled back, third-party studios face reduced financial backing for ambitious VR projects.
Fitness App Competition: Supernatural competed against Peloton and Apple Fitness+. Its stagnation cedes ground to rivals still actively developing content.
Developer Distrust: Acquisitions followed by closures damage trust with independent studios considering partnership deals. Sanzaru was acquired by Meta in 2020.

Limitations and Unanswered Questions

User Investment: Supernatural subscribers paid $100+/year expecting ongoing updates. Meta hasn't clarified refunds or long-term service guarantees.
Game Preservation: Always-online DRM in titles like Asgard's Wrath 2 risks making purchased games unplayable if servers shut down.
Broader VR Market: The cuts occur amid plateauing VR headset sales industry-wide. IDC reports global AR/VR headset shipments fell 8.3% YoY in Q3 2025.

Meta's retrenchment reflects a painful reality: even with $140B in annual revenue, sustaining speculative metaverse investments requires ruthless prioritization. The company now bets its VR future on hardware ecosystems and third-party developers rather than in-house studios—a strategy that failed for Microsoft's Xbox during the mobile era.