Cost cutting at Meta is underway with the Wall Street Journal reporting “many thousands” are likely to lose their jobs at the company starting this week.
Indications of imminent cost cutting at Meta picked up late last week as developers and researchers reported events and travel sponsored by the company were abruptly cancelled. Bloomberg recently reported the company would reduce its headcount to be “smaller in 2023 than it was this year.” Meta employed 87,314 people in September 2022, according to public filings, with a headcount of 71,720 ending 2021.
The layoffs would mark the end to an era of unprecedented growth at the company-formerly-known-as-Facebook that’s continued since its founding in 2004. While Meta isn’t alone in instituting cost-cutting, its layoffs may be some of the most substantial due in part to the unique structure of the company and its rapid growth in recent years. With the rebrand from Facebook to Meta, the company restructured its organization into two main divisions. The Reality Labs division represents Meta’s forward-focused platforms and hardware, including the Quest 2 and Quest Pro headsets, as the company’s Family Of Apps division focuses on its biggest legacy moneymakers, including Facebook, Messenger, Instagram and WhatsApp.
The ad-driven Family Of Apps division faces severe headwinds with dominant consumer hardware companies like Apple tightening control of its platform as Meta CEO Mark Zuckerberg focuses research and development on what he sees as the next generation of personal computing. Zuckerberg told us recently the company was likely to focus on four key platforms in its Reality Labs division — Horizon and its avatars, VR headsets, AR headsets, and neural interfaces like its upcoming watch/wristband.
While Meta’s Reality Labs division saw a drop in revenue due in part to a price increase for its market-leading Quest 2 headset, the company has already started teasing the 2023 release of its next consumer-focused VR headset. Meta hasn’t officially named it Quest 3 yet and has yet to formally reveal a single new game in development from the eight VR-focused game studios it acquired. With the likelihood of substantial new games, an increase in processing power, and subsidized pricing bringing Quest 3 into the $300-$500 range, the layoffs are likely to focus the company’s efforts ahead of a push for Quest 3 to dominate the consumer VR market from 2023 onward.
Of course, Meta also faces renewed competition with Pico, Sony, and Apple among the companies developing VR headsets targeting different markets and regions.