Palmer Luckey says Meta's VR layoffs aren't a 'disaster' — and fix a problem critics aren't talking about

• Oculus founder Palmer Luckey said Meta's VR layoffs don't signal retreat from the industry.
• He said Meta's first-party VR studios were crowding out third-party developers across the industry.
• He said cutting subsidized VR games lets Meta refocus on core tech and platform stability.

Meta's decision to cut more than a thousand jobs in Reality Labs and wind down parts of its metaverse strategy has reignited fears that the company is quietly backing away from virtual reality.

Oculus founder Palmer Luckey says that interpretation is wrong — and misses a deeper problem the cuts may actually solve.

In a series of posts on X on Monday, Luckey said that Meta's Reality Labs layoffs, which The New York Times reported were roughly 10% to 15% of the division's 15,000 employees, do not signal retreat.

Meta still employs the largest VR workforce in the world, he said, dwarfing competitors "by about an order of magnitude."

From a numbers perspective, Luckey framed the layoffs as "six months of normal churn concentrated into 60 days," not an existential blow.

How Meta's own VR studios distorted the industry

The more consequential shift, he said, lies in where the cuts landed.

According to Luckey, most of the eliminated roles were tied to first-party content — Meta-owned studios building internally developed VR games.

Those teams, he said, had become a growing problem for the broader VR ecosystem.

"Meta heavily subsidizing their own (with money, marketing, placement, etc) at the expense of core technical progress and platform stability doesn't make sense," Luckey wrote. "Crowding out the rest of the entire ecosystem, even less so."

Luckey said third-party developers — even efficient, well-run studios — struggled to compete against Meta-owned teams backed by budgets that far exceeded what the market could realistically return.

The irony, he added, was that strong reviews and polished execution only worsened the imbalance by pulling attention and sales away from independent creators.

"People will point out that these teams did an awesome job and got awesome reviews from critics and customers alike — yes, and fucked up though it is, that makes the problem even worse!" he wrote.

A return to Oculus's ecosystem-first philosophy

In a capital-constrained environment, Luckey said, Meta's resources are better spent on core technology and platform stability than on competing directly with developers it needs to keep VR viable.

He also framed the move as a return to Oculus's original philosophy. Internally, he said, the company aimed "to NOT be Nintendo" — avoiding a closed, first-party-dominated model in favor of building an ecosystem that others could profit from.

Luckey acknowledged the human cost of layoffs and said he felt "really bad for the people impacted."

Still, he said that scaling back first-party content is ultimately "a good thing for the long-term health of the industry," even if it's uncomfortable in the short term.