Podcast Summary: Meta's AI Strategy Dissected
The Jaeden Schafer Podcast
Date: January 20, 2026

Episode Theme & Purpose

In this episode, Jaeden Schafer offers a no-nonsense breakdown of Meta’s dramatic pivot away from the Metaverse toward artificial intelligence (AI) as its new core strategy. The episode unpacks Meta’s massive investment, shift in company vision, and what the future could look like as they leave behind much of their Metaverse ambitions. The discussion connects recent layoffs, product failures, and surprising hardware successes, setting the stage for why AI—and not virtual reality—is the company’s new bet.

Key Discussion Points & Insights

The Collapse of the Metaverse Dream

• Massive Layoffs and Shutdowns:

  • Meta (formerly Facebook) is laying off around 1,500 employees from Reality Labs as they shut down VR game studios (00:09).
  • Notable closures: Studios behind “Resident Evil 4 VR,” Marvel’s Deadpool VR, Asgard’s Wrath, VR fitness app Supernatural (acquired for $400M in 2023), and Camouflage (makers of Batman: Arkham Shadow) (02:51).
  • “It's kind of a dramatic moment ... which was just, you know, four years ago, rebuilding its entire identity around the Metaverse.” (00:23)

• Why Meta Bet Big on the Metaverse

  • In 2021, Facebook rebranded as Meta, envisioning the Metaverse as a new social platform, banking on Gen Z’s preference for socializing in online games like Fortnite and Roblox rather than feed-based apps (00:49).
  • Rebrand also aimed to distance from reputational damage—data scandals, whistleblowers, congressional hearings, and accusations of monopoly and censorship (01:03).

• The Reality of Adoption and Product Shortcomings

  • Many users found Meta's VR headsets to be novelties: “I purchased a Meta VR headset ... it sat in my closet, and I never used it for a couple years. That was probably the experience a lot of people had.” (01:50)
  • Early Metaverse products had major flaws—awkward, legless avatars, and clunky user experiences. Viral screenshots of Zuckerberg’s in-world avatar highlighted the lack of polish (04:53).
  • Massive budget: Meta invested an estimated $73 billion in the Metaverse/Reality Labs. “You’d need to spend a million dollars every day for 200 years to reach that amount of money.” (04:17)

The Business and Strategic Rationale

• Escape from Apple & Google App Store Dominance

  • Meta’s true long-term ambition was to control a new app distribution platform, getting out from under Apple and Google’s “duopoly.” (06:10)

• Economic Missteps

  • Meta charged developers a 47.5% cut on digital sales in Horizon Worlds (combining a 30% platform fee with a 17% cut) — higher than Apple or Google.
    • “If you have to give half of it away, you find another platform, especially because they're not driving that much growth.” (12:28)
  • Schafer relates his own experience:
    • “We actually built a VR headset app and ... 47.5% basically makes you not want to promote the app.” (12:14)

• Disparity Between Ambition and Adoption

  • Despite projections from consulting firms and banks (McKinsey, Citi) predicting a multi-trillion-dollar Metaverse economy, adoption lagged seriously.
  • Horizon Worlds: ~60 million downloads globally since 2018, with daily engagement numbers dwarfed by Meta’s other platforms (08:44).
    • “These numbers from Horizon Worlds are barely even registering compared to some of their other properties.” (09:50)

• Repeated Strategic Mistakes

  • Meta prioritized monetization over ecosystem growth, discouraging developers and stifling platform adoption.

Silver Linings: Wearables & AI

• Ray-Ban Smart Glasses—An Unexpected Hit

  • Ray-Ban Meta smart glasses have been “incredibly popular,” at points outselling traditional Ray-Bans in 2024. Production is set to double to meet demand (14:05).
    • “These have been incredibly popular ... they give you essentially the ability to, without your hands, go record stuff, you can play music. They have a whole bunch of AI-powered features.” (13:23)
  • Integration of AI-powered features and potential for AR overlays—Google, Oakley, and other brands entering the market (15:00).

• Meta’s Hardware Edge for the AI Era

  • The large investment in VR inadvertently positioned Meta to succeed in the AI-powered wearables space.
  • Hardware success with smart glasses gives Meta a critical advantage as AI assistants and AR interfaces become consumer focuses (17:16).

The Future: From Metaverse to AI

• Strategic Realignment
  • AI is now one of Meta’s “core products,” and the shift away from the Metaverse is presented as an “obvious solution” (17:48).
    • “The Metaverse experiment, it feels like, is kind of coming to an end. I think the future, at least for now, is going to be in AI, where Meta is going to focus the most.” (18:00)
  • The Ray-Ban smart glasses and similar products will be central to Meta’s AI and hardware strategy going forward.
    • “It’s their biggest competitive advantage when it comes to AI ... that hardware that has been successful.” (18:23)

Notable Quotes & Moments

• On the End of the Metaverse Gamble:
  • “That is pretty ... colossally massive of a failure.” (04:34)
• On Misalignments and Industry Irony:
  • “So the interesting thing is that instead of giving a better deal than Apple or Google, Meta actually charged a lot more.” (11:33)
• On Personal Experience with VR:
  • “It was kind of a novelty ... also kind of gave you a headache. And you kind of just moved on.” (01:57)
• On the Real Value of Massive R&D:
  • “I think because they were in the Metaverse, they spent over $70 billion there. I think they were really well set up to ... do these meta Ray Bans and I think they're actually beating out most of the other players.” (15:40)
• On Meta’s Next Chapter:
  • “I would definitely not count meta out in this regard. And I think it's their biggest competitive advantage when it comes to AI ... that hardware that has been successful.” (18:23)

Timestamps for Major Segments

• 00:00 — Overview: Meta’s spent years and billions on the Metaverse
• 00:49 — Why Meta rebranded and shifted to VR/Metaverse
• 02:51 — Layoffs and studio shutdowns detailed
• 04:34 — The cost: $73 billion “colossal failure”
• 06:10 — Strategic intent: escape from Apple/Google
• 08:44 — Lack of traction: user numbers and engagement
• 11:33 — Economic model: platform fees and developer frustration
• 13:23 — Smart glasses surge as a wearable success
• 15:00 — The future of AR hardware; Meta’s competitive position
• 17:16 — AI as Meta’s new core offering
• 18:00 — Analysis: Metaverse end, AI future

Takeaway

Jaeden Schafer delivers a candid, incisive analysis of Meta’s grand Metaverse experiment and why it’s giving way to a hard-edged focus on AI hardware and platforms. While Meta’s VR ambitions failed to catch on, their colossal R&D investment set the stage for unexpected victory in the AI-powered wearables space—suggesting Meta may yet lead the next chapter in consumer tech, not with virtual worlds, but with smart, AI-enabled glasses.