#352: Dark night

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It should not have taken until 2026 for Mark Zuckerberg to admit his metaverse dream is doomed. It was obvious from the moment he renamed Facebook back in 2021, and outlined a vision for a shared digital future in which we all would live and work and hang out and fuck in a sub-Second Life VR space in which we had no legs. It was obvious well before he chucked the thick end of seventy billion dollars at it. It was obvious well, well before this week, when he finally admitted what most of us had known from day dot. He has, finally, slashed the Reality Labs division’s budget, waved the white flag and, in so doing, set in motion the death of VR gaming.

The cut, apparently, only amounts to a tenth of the division’s total headcount, though the figures are muddied somewhat by Zuck apparently having folded Meta’s AI endeavours into Reality Labs, and in any case are so clearly targeted on his metaverse and gaming teams that it’s pretty clear what the goal here really is: a massacre. Twisted Pixel Games, likely best known round these parts for annoyingly apostrophised Xbox Live Arcade platformer ‘Splosion Man but latterly reinvented as a VR studio — it was acquired by Meta in 2021 and was behind last year’s Deadpool VR — has been closed. So too has Sanzaru Games, maker of the Asgard’s Wrath series, a pair of VR RPGs briefly touted as Meta Quest’s killer apps (the second game was a launch pack-in with Quest 3). Armature Studio, founded in 2008 by a gang of Retro Studios alumni and best known for the stellar VR port of Resident Evil 4, is also gone. There have also been layoffs at other Meta-owned studios including Camouflaj, maker of, among other things, Batman: Arkham Shadow, which was crowned VR game of the year at The Game Awards in 2024.

Little remains of Meta’s VR-game acquisition spree, which began in 2020. Ready At Dawn was closed down in 2024, and Downpour Interactive followed last year. According to the in-the-know cats at UploadVR, Meta’s only remaining studios are Beat Games, maker of the colossally successful Beat Saber; BigBoxVR (me neither); whoever’s left at Camouflaj; and Ouro Interactive, which I’m not sure counts because it exclusively makes games for the Horizon Worlds legless-metaverse-thing. You do not need to put on a headset to see the writing on the wall, which is just as well because all the headsets are in cupboards or lofts or little storage boxes, and would need digging out and charging and who can be bothered with that? In a way, I suppose, that’s been VR gaming’s story all along.

At this point, after dispensing the customary sympathies to the workers who have lost their jobs this week, Hit Points would normally put the boot into the company, and often the person, who has swung the axe. This time, however, I’m not sure it’s appropriate. Loath as I am to miss out on the chance to give Zuckerberg some well-deserved lumps, the uncomfortable truth here is that without Meta’s backing, VR gaming would likely have died out long ago. Zuckerberg’s desire, however doomed and desperate, to make the metaverse happen is the reason the sector has lasted as long as it has. No matter how portentous the tea leaves Meta pumped out new headsets, subsidised them to reasonable affordability, and carried on bankrolling developers, both through acquisitions and its publishing wing.

There is vanishingly little money to be made in this little corner of the game industry. As the ever-reliable chums at GameDiscoverCo revealed a few days ago, F2P has been the dominant model on Quest for some time; the big dog is Gorilla Tag, a casual social game apparently beloved by The Youth, and a number of Quest’s more (relatively) successful games tread a similar path. New games struggle for traction: just one of last year’s 20 top-grossing games was a paid release that actually launched in 2025, and that barely squeaked onto the list in 19th. GDCo estimates that Hard Bullet, the game in question, has sold in the “mid-hundreds of thousands”, and that “most new games not in the sim, sports, shooter or simian genres have been selling a few thousand units at best on paid VR release in 2025.” Crumbs.

In other words, there’s not really a market here — not without Meta’s support, anyway, since for the past half-decade at least it has been the only real game in town. If the situation looks bleak on Quest, on PlayStation it is simply apocalyptic: GDCo reckons that the VR FPS Ghosts Of Tabor has sold 300k on Steam, “low millions” on Quest, and less than twenty thousand on PSVR2, which perhaps explains why Sony was so quick to pretend the headset’s release never happened. Valve may have a vested interest in VR’s success, what with the forthcoming Steam Frame, but it has never been in the business of funding other people’s games and this is clearly no time to start. Aside from Ubisoft’s short-lived interest in the earliest days of Oculus, thirdparties have never been particularly bothered about VR, and the low returns on offer mean no investor worth their salt will step in now. When even the Pistol Whip guys can’t get funding, the writing is on the wall.

Even those who wrote off VR gaming from the start — many of whom I know personally, and are doubtless reading this newsletter while patting themselves on the back — will, I am sure, agree what a shame this all is. I never really took to VR. It’s too much of a faff to set up for one thing, plus I never really got my ‘VR legs’ and therefore spent most of my time in a headset trying not to be sick. But it’s given me some experiences I will never forget. Crawling around on the floor like an idiot, heart racing as I avoided robot guards in Budget Cuts. Whacking a kitchen cupboard while nailing a perfect cover drive in IB Cricket. Wondering what was wrong with Tetris Effect’s visuals before realising I was blinking back tears; feeling like I was coming up on a double-drop the first time I played Rez Infinite; and let’s be honest, the entirety of Pistol Whip and Superhot VR. There was magic to be found here, and much as it irks me to type it we really, truly, have Mark Zuckerberg to thank for keeping it alive this long. God. Now I really feel sick.

MORE!

• Tim fucking Sweeney! My god! The Epic Games bossdog has been At It Again this week, letting his libertarianism get the better of him by going to bat for not-Twitter amidst threats of governmental banning orders because of the whole Grok CSAM thing. (If that sentence means nothing to you, count yourself lucky.) Sweeney was, in fairness, making a broader point about governments censoring political opponents. But context is key, and when the context involves people making non-consensual sexualised images of kids and people they hate, maybe that’s not a good day for speaking in broad strokes? Dunno, Tim, just an idea. Have two more: log out and fuck off.
• It’s maybe a bit early in the new year to be talking about themes and trends and stuff, but I’ve been struck by the reliable cadence of game (and game-adjacent) companies publicly swearing off the use of generative AI of late. Hit Points tips its hat to, among others, Warhammer parent Games Workshop, the makers of the new Ecco The Dolphin (!), and Manor Lords publisher Hooded Horse. Big fan, too, of the solo indie dev who delisted his partly AI-made game from Steam after his new girlfriend convinced him of the technology’s evils: “The game existing in its current form is a disgrace to all game makers and players.” Girlfriends! They’re good! Who knew!
• Hytale, the years-in-the-making Minecraftlike that was cancelled by Riot Games a couple of months ago, launched this week after the devs reacquired the rights to the game, and my word it’s absolutely flying. The team loftily expected a million players when it launched into early access on Tuesday; in the end they got almost three times as many, while a further 420,000 watched along on Twitch. Crazy stuff. Wonder how Riot feels about this. Bit stupid, one hopes.
• Fallen demon-king Bobby Kotick has accused Fuckin’ Embracer Group of being behind a class-action lawsuit accusing Activision’s former board of directors of neglecting their fiduciary duties by rushing through Microsoft’s $70bn acquisition of the Call Of Duty maker. Kotick’s army of winged legal goblins say the suit is a “collateral attack on Activision [that] also appears to be tied to Embracer’s desire to boost sales of its games while leaving Activision hamstrung in the development of its own games that competed against Embracer’s titles.” Embracer sounds rather amused by it all: “We are humbled [at the suggestion] that we were competing with Activision on this level.”
• Nintendo’s share price has fallen by a third in the last five months, as investors get increasingly jumpy over Switch 2 sales tailing off, and the prospect of price rises amid the AI surge and ongoing tariff daftness. Yikes. Better rush out that new 3D Mario, eh. Why not do it today? I have a free weekend.
• With the buzz from shutting down its newly unionised Halifax studio tapering off, Ubisoft has done some more layoffs. Fifty-five people are being let go from Massive’s offices in Malmo and Stockholm, with a further 29 let go from a mobile-focused studio I had no idea existed in Abu Dhabi. Bleurgh.
• EA doesn’t entirely deserve its bad reputation, according to gobby Split Fiction director Josef Fares. “There are a lot of great people at EA. They know how we work. They respect it and they leave us be... We have a great relationship,” he told The Game Business, while a bonesaw presumably hovered ominously just out of shot.
• The Rockstar North union-layoff dispute continues to rumble on, with staff denied interim pay at an employment tribunal earlier this week. The folks at People Make Games continue to do incredible work on this, do check ‘em out. Some really rum stuff going on beneath the headlines.
• GameStop is closing 470 US stores, and shutting down its EB Games operation in Australia and New Zealand. Bad vibes all round — unless, of course, you’re in the CEO’s chair. Ryan Cohen has been offered a Muskian performance incentive that will net him $35bn in trade-in credit if he manages to grow GameStop’s market cap to $100bn. (Don’t worry, it’s currently less than a tenth of that.)
• Lego Pokemon? Lego Pokemon. I have explicitly forewarned the children that we cannot have that £580 Venusaur/Charizard/Blastoise set, though I am secretly quite sad about it. 
• I have no idea why I covet La Machine so much, but I really, really do.
• Here's Yoshi eating Peach.

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