Category Archives: Games

Meta CFO: We’re “Building Future Headsets” & Still “Have Optimism” In VR

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Meta CFO Susan Li says the company still has “optimism in the future of VR”, and confirmed that it’s still “building future headsets”.

Li made the comment during Meta’s Q4 2025 earnings call this week, in response to a Deutsche Bank analyst asking whether the Reality Labs division would have a “narrow focus on wearables”.

“However, consumer adoption of VR has generally been on a slower growth path than wearables, and we are rebalancing our Reality Labs portfolio to reflect this”, Li also said, reiterating what CTO Andrew Bosworth declared in Davos last week.

“So, we are meaningfully reducing our investment in VR and Horizon this year, but we’re growing our investment in wearables to capitalize on the momentum that we’re seeing in our position as a market leader”, she continued.

Meta first officially confirmed this shifting spending strategy in December. Then, earlier this month the company shut down three of its acquired VR game studios, conducted significant layoffs at a fourth, canceled the Batman: Arkham Shadow sequel, and announced the shutdown of Horizon Workrooms and its Quest headsets for business offering.

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Earlier in the Q4 earnings call, Mark Zuckerberg told investors that the company’s reduction in spending would make VR “a profitable ecosystem over the coming years”.

The Reality Labs division of Meta, which handles VR, Horizon Worlds, and smart glasses, recorded record spending in Q4, just shy of $7 billion. Given revenue of just under $1 billion, that resulted in a “loss” of around $6 billion.

Reality Labs continues to be heavily focused on research and development, though, and much of this “loss” is actually the spending towards developing true AR glasses, the “holy grail” consumer tech product that companies like Apple, Meta, and Google believe will define the next wave of personal computing.

Zuckerberg told investors to expect Reality Labs losses to finally peak in 2026, with Li stating that it’s Meta’s “expectation” that the losses will start to decrease in 2027, depending on how the market develops.

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As to the “headsets”, plural, that Susan Li was referring to, leaked internal memos from early December revealed that in addition to the widely reported ultralight headset with a tethered puck, Meta was also now working on a traditional new Quest focused on “immersive gaming”.

The memo indicated that the headset, which wouldn’t be expected until late 2027 at the very earliest, should bring a “large upgrade” over Quest 3, but no longer be subsidized, carrying a higher price. That tracks with Zuckerberg’s reference to VR becoming “profitable” for Meta “over the coming years”.

Many in the industry have speculated that this headset may have already been canceled in the wake of Meta’s other VR cuts, but Li’s reference to “headsets” may suggest it’s still in the works. Only time – or yet another leak – will tell.

Snap Forms ‘Specs Inc’ to Insulate AR Business Ahead of AR Glasses Launch

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Snapchat maker Snap announced it’s formed a new business dedicated to its upcoming AR glasses.

The News

Called Specs Inc, the wholly-owned subsidiary within Snap is said to allow for “greater operational focus and alignment” ahead of the public launch of its latest AR glasses coming later this year.

In addition to operating its AR efforts directly under the new brand, Snap says Specs Inc will also allow for “new partnerships and capital flexibility,” including the potential for minority investment.

Snap Spectacles Gen 5 (2024) | Image courtesy Snap Inc

In September, Snap CEO Evan Spiegel noted in an open letter that the company is heading into a make-or-break “crucible moment” in 2026, characterizing Specs as an integral part of the company’s future.

“This moment isn’t just about survival. It’s about proving that a different way of building technology, one that deepens friendships and inspires creativity, can succeed in a world that often rewards the opposite,” Spiegel said.

While the company hasn’t shown of its next-gen Specs yet, the company touts the device’s built-in AI, something that “uses its understanding of you and your world to help get things done on your behalf while protecting and respecting your privacy.”

Snap further notes that it’s “building a computer that we hope you’ll use less, because it does more for you.”

My Take

Snap (or rather, Specs) is set to release its sixth-gen Spectacles this year, although this is the first pair of AR glasses the company is ostensibly hoping to pitch directly to the public, and not just developers and educational institutions.

Info is still thin surrounding Spec Inc’s launch plans for the devices, although forming a new legal entity for its AR business right beforehand could mean a few things.

For now, it doesn’t appear Snap is “spinning out” Spectacles proper; Snap hasn’t announced new leadership, leading me to believe that it’s more of a play to not only attract more targeted investment in the AR efforts, but also insulate the company from potential failure.

Snap Spectacles Gen 5 (2024) | Image courtesy Snap Inc, Niantic

It’s all fairly opaque at this point, although the move does allow investors to more clearly choose between supporting the company’s traditional ad business, or investing it the future of AR.

However you slice it though, AR hardware development is capital intensive, and Snap’s pockets aren’t as deep as its direct competitors, including Meta, Apple, Google, and Microsoft.

While Snap confirmed it spent $3 billion over the course of 11 years creating its AR platform, that’s notably less than what Meta typically spends in a single quarter on its XR Reality Labs division.

It’s also risky. The very real flipside is that Specs Inc could go bankrupt. Maybe it’s too early. Maybe it underdelivers in comparison to competitors. Maybe it’s too expensive out of the gate for consumers, and really only appeals to enterprise. Maybe it isn’t too expensive, but the world heads into its sixth once-in-a-generation economic meltdown.

Simply put, there are a lot of ‘maybes’ right now. And given the new legal separation, Snap still has the option to survive relatively unscathed if it goes belly up, and lives to find another existential pivot.

The post Snap Forms ‘Specs Inc’ to Insulate AR Business Ahead of AR Glasses Launch appeared first on Road to VR.