Meta Closes Studios Responsible for Deadpool VR, Asgard’s Wrath 2, and Resident Evil 4 VR

Meta has recently closed down three of its internal development studios, impacting Twisted Pixel Games, Sanzaru Games, and Armature Studio. Reports have surfaced indicating that these layoffs are part of a broader restructuring within Meta’s Reality Labs, which focuses on first-party VR game development. On Tuesday, developers from these studios took to social media to announce their job losses. Confirmations from various sources indicate that all employees at Twisted Pixel Games, Sanzaru Games, and Armature Studio were affected by this round of layoffs.

In a statement, Meta’s Tracy Clayton explained that these cuts were necessary for the company to shift its focus toward wearables, such as the Ray-Ban Meta AI glasses. This move significantly diminishes Meta’s AAA first-party development capabilities for its Quest headsets. Each of the affected studios has a rich history prior to their acquisition by Meta. Twisted Pixel Games rose to prominence with Xbox Live Arcade hits like ‘Splosion Man and Comic Jumper: The Adventures of Captain Smiley, and had been developing VR titles for the last decade, including the recently released Marvel’s Deadpool VR in November 2025.

Sanzaru Games was known for Asgard’s Wrath 2, a free title bundled with the Meta Quest 3, and had previously worked on the original Asgard’s Wrath in VR, along with notable Sony 3D platformers like Secret Agent Clank and Sly Cooper: Thieves in Time. Armature Studio, founded by ex-Retro Studios developers, gained recognition for the Xbox One exclusive ReCore and most recently delivered a VR port of Resident Evil 4 in 2021.

While Beat Games, the creators of Beat Saber, and Camouflaj, known for Batman: Arkham Shadow, continue to operate, this shake-up represents a significant setback for VR game development, especially considering Meta’s leading position in the virtual reality market.