According to Meta’s recent quarterly earnings report, Quest headset sales are declining, however AI glasses are growing fast enough to partially offset a slump in Reality Labs revenue. And moving forward, the company says only the “major” VR breakthroughs will warrant productization.
The Update News
“Within our Reality Labs segment, Q3 revenue was $443 million, down 6% due to lower Quest headset sales, which were partially offset by continued strong growth in AI glasses revenue,” Meta CFO Susan Li said during the company’s Q3 2026 earnings call last week.
The numbers are only a snapshot, but they show how Meta’s hardware priorities are changing. When the company pivoted Reality Labs toward wearables and AI, it pushed consumer VR hardware and its metaverse ambitions down the priority list. That signaled a broader shift for Meta and the wider VR industry.
The shift will also affect future Meta Quest hardware, as the company appears to be moving away from regular generational upgrades.
“We are changing our approach to virtual reality to only ship new devices when we have major breakthroughs like we had with the Meta VR Glasses this year,” Zuckerberg said. His comment echoes statements from Meta’s Connect developer conference in September, where AI advancements dominated the event.
Zuckerberg hasn’t given up on VR, though. He still believes in its long-term potential, even if the AI race now takes priority.
“I continue to believe that the path to delivering the holographic experience of bringing together the physical and digital worlds in everyday glasses will come through VR first, but we will pace this aspect of our investment more to focus on delivering personal superintelligence first,” Zuckerberg continued.
Meta VR Glasses are due to launch in Spring 2027 at $1,300, aimed at prosumers and professionals. With that launch, Meta’s next VR hardware bet looks more like a stepping stone toward augmented reality than a traditional Quest successor.
My Take:
What’s less clear is where the game-focused Quest platform fits in all of this. Meta is now holding off on iterative VR hardware releases while it targets a different audience with Meta VR Glasses.
Hypothetically, Meta could offer steep holiday discounts on Quest 3 and Quest 3S to make up for slower-than-usual VR hardware sales this year.
Still, I wouldn’t bet on a temporary bump in hardware revenue changing Meta’s mind about consumer VR. The company pulled most of its funding for big, expensive VR content earlier this year, with no apparent plans to resume. That’s generally not something you do if you’re betting on the long-term health of a VR gaming platform.
