Meta has closed three internal studios that produced some of its biggest Quest games, according to reports. The affected teams are Twisted Pixel, the developer of Deadpool VR; Sanzaru Games, known for the Asgard’s Wrath series; and Armature, which handled the VR port of Resident Evil 4. UploadVR reported the closures and the broader layoffs inside Reality Labs gaming.
The moves come as Valve prepares to launch the Steam Frame headset. Those closures remove a portion of Meta’s first-party game support for Quest 2, Quest 3, and Quest 3S. Asgard’s Wrath 2 and Resident Evil 4 VR were previously bundled with Quest 3 and Quest 2 hardware respectively. Deadpool VR released in November 2025 but was not bundled with Quest 3 or 3S during the holiday period.
All three franchises have been Quest store exclusives. That exclusivity means the titles have not appeared on Steam for other headsets. With those teams disbanded, former developers may move to other studios or form new teams that publish across platforms, making those games more likely to reach a wider set of headsets and storefronts.
The studio closures follow an internal reorientation at Meta away from earlier VR investments and toward AI initiatives. Multiple industry sources have suggested Meta has been selling Quest hardware at a loss, and the company has been reducing investment in first-party game development for its headsets.
Valve’s Steam Frame now faces a potentially friendlier market. Steam already hosts a large library of VR content. If Valve’s headset launches with strong pricing and access to that library, many consumers may prefer a single, Steam-first experience over a device whose first-party game support is being cut.
There is still competition in the standalone and PC-tethered VR space. Sony’s PSVR 2, the Pico 4 Ultra, HTC Vive line, and Samsung Galaxy XR are all alternatives. PSVR 2 supports PC VR through an adapter and its PlayStation Store lineup centers on games, which keeps it relevant to buyers focused on gaming.
Price will be crucial. The Quest 3 and 3S found mainstream traction partly because of accessible pricing. Valve’s path to wider adoption depends on closing the gap between premium PC headsets and the mainstream market while giving buyers easy access to Steam’s VR catalog.
UploadVR was first to report the studio closures.
Meta closing these studios reduces first-party incentives to buy Quest hardware. It also opens an opportunity for Steam Frame to attract buyers who want broad access to VR content on PC. Watch pricing and launch windows closely as the market responds.
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