Meta has confirmed the closure of three prominent virtual reality game development studios, marking a significant strategic shift away from the Metaverse and towards wearable technology. The move results in layoffs within the company's Reality Labs division and ends the operations of the teams behind acclaimed titles like Asgard's Wrath and Marvel's Deadpool VR.
The Studios and Their Legacies
The three studios affected are Armature Studio, Sanzaru Games, and Twisted Pixel Games. Sanzaru, acquired by Meta in February 2020, is best known for its highly-regarded VR RPG Asgard's Wrath and its 2023 sequel. Prior to its VR work, the studio handled ports like The Sly Collection and developed Sly Cooper: Thieves In Time for PlayStation 3.
Twisted Pixel Games, known earlier for Xbox Live Arcade hits such as 'Splosion Man, was acquired in 2021. It successfully pivoted to VR, releasing Marvel's Deadpool VR in November 2025. Armature Studio, acquired in 2022, was behind ReCore and the Batman: Arkham Origins Blackgate title, and delivered the celebrated VR port of Resident Evil 4 for Meta Quest 2 in 2021.
Official Statement and Employee Reactions
A Meta spokesperson stated the closures are part of a broader investment pivot announced the previous month. 'We said last month that we were shifting some of our investment from Metaverse toward Wearables,' the spokesperson told Gematsu. 'This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.'
News of the shutdowns was first shared by affected employees on social media. Andy Gentile, a designer at Twisted Pixel, posted: 'I’ve just been laid off. It appears the entire Twisted Pixel Games Studio has been shut down. Sanzaru Games too.' His statement was corroborated by Sanzaru senior level designer Ray West on LinkedIn, who praised his 'amazing team of powerhouse talent.'
A Broader Trend in the Gaming Industry
This move by Meta follows a pattern of widespread studio closures and layoffs across the Western gaming industry in recent years. While Microsoft has been notably active in downsizing, nearly every major publisher has conducted significant cuts during the current console generation. Meta's decision underscores the volatile nature of investment in emerging tech sectors like virtual reality.
Despite these closures, Meta's Reality Labs division retains other game studios, including Beat Saber developer Beat Games and Camouflaj, the studio behind the upcoming Batman: Arkham Shadow. The company's strategic refocusing suggests a recalibration of its ambitions, prioritising wearable hardware over expansive Metaverse software development in the immediate future.
