Is the curtain finally coming down on the metaverse’s money-burning extravaganza?

The latest news shows that Meta is planning to make drastic cuts to its Reality Labs division—its 2026 budget may be slashed by nearly 30%. For context, while other departments are only tightening their belts by 10%, this former “shining star of future technology” is facing three times the pressure. To make matters worse, a wave of layoffs could arrive as early as next year.

Numbers don’t lie. Since the high-profile rebranding in 2021, Reality Labs has burned through $70 billion. Yes, seventy billion. This division, responsible for Horizon Worlds’ virtual universe and Quest headsets, is now facing its most severe strategic contraction since its inception.

It’s even grimmer for “metaverse tokens” in the crypto space. Their total market cap has evaporated by more than 99% since the beginning of the year—essentially going to zero. Once-hyped virtual real estate, digital identities, and on-chain social platforms have now almost completely vanished.

So, what went wrong? The AI wave hit too hard and too fast. When ChatGPT and various large language models seized everyone’s attention, VR headsets and virtual worlds suddenly lost their allure. Tech giants and investors collectively shifted their focus, and the metaverse went from being “the next generation of the internet” to “an expensive experiment.”

This reversal came out of nowhere. Just a few years ago, the metaverse was the “holy grail” chased by both the tech and crypto communities, with countless projects raising tens of millions of dollars with just a pitch deck. But reality bites—hardware experiences fell short, content ecosystems failed to take off, user growth stalled, and capital markets lost patience.

When dreams meet reality, all that’s left are cold financial statements and shrinking budgets. Will the metaverse story continue? At least for now, the outlook is far from optimistic.