Is Virtual Reality Really Dead?

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Things don't look great for virtual reality. Once seen as the future of online interaction, the present has caught up to VR, and it's brutal: Meta is by far the biggest dog in the virtual reality kennel, and its virtual reality division, Reality Labs, lost over $73 billion since it launched five years ago, leading the company to pull some resources from VR to focus on smart glasses and AI. Apple, seen as the runner-up in the VR market, shipped only 45,000 Vision Pro headsets in the final quarter of 2025, a rounding error compared to the 82.6 million iPhones Apple sold in the same period.

At his metaverse introduction in 2021, Mark Zuckerberg envisioned Horizon Worlds as a vast digital continent, but its active user base is around 200,00 people. For comparison, kids’ game Roblox boasts over 380 million monthly active users. And this is all despite Meta's and Apple's headsets being excellent hardware, by almost all accounts.

In the cold light of the ledger, virtual reality looks like shambling corpse, too dumb to know it’s dead. But they said the same thing about video games in 1983—Atari’s death looked like the end of the road, but then the NES came out. 

Zuckerberg’s sales pitch of a billion people living in a frictionless, legless, gravity-free vacuum of suburban-techno-capitalism might be gone—it turns out we didn’t want another world full of random people—but what’s growing in its place is a bottom-up community built by filmmakers, game developers, and regular people, all creating a new way to belong.

Virtual reality filmmaking is an exciting new avenue

“What we're all trying to do is build the Holodeck from Star Trek,” said Matt Celia, co founder and creative director of Light Sail VR told me. Light Sail has been producing VR films and video for the past 10 years, and its catalog includes everything from concerts at Red Rocks to narrative VR series to an Emmy-winning immersion into Saturday Night Live's 50th Anniversary. “My belief in the medium is unshaken,” Celia said. “I think this is the most authentic way to tell stories.”

According to Celia, experiencing films in VR frees the viewer from distractions that mar other ways of watching—your phone’s bright screen isn't going to pull your attention, and you literally don't have visible surroundings to distract you. “When you make the conscious choice to put on a headset, to watch a piece of content and engage with it, it's actually transformative, almost meditative," Celia said.

More than just a new way to show old movies, immersive film is a new medium being born; filmmakers are inventing a new language. Whether it’s in a you-are-there, 360-degree view of Steve Martin’s SNL monologue, narrative VR series like Eli Roth's The Faceless Lady, or interactive documentary experiences like D-Day: The Camera Soldier, artists are using virtual reality to tell stories in a completely new way. “We're all obsessed with this idea that we can live and breathe into a story,” Celia said, “That is what's driving us all to create these more and more immersive and impressive and impactful experiences.”

Gaming in virtual reality is still great, too

Visionary experiences are great, but most people buy VR headsets to play games. The news that Meta shuttered three of its AAA game development studios—Armature, who brought Resident Evil 4 to VR; Sanzaru, the studio behind Asgard’s Wrath; and Twisted Pixel, creators of Deadpool VR—might suggest that VR gaming is on life support. It could also just be the growing pains of the gaming industry figuring out what works in a new medium.

Virtual Reality game studio Resolution Games seems to have cracked the code. The company has grown consistently since it started up in 2015, selling millions of games despite a challenging environment, with its flagship title Demeo earning critical raves and a partnership with Wizards of the Coast on Demeo x Dungeons & Dragons: Battlemarked. 

“We are very conservative with our funds, and we're very resource efficient,” Tommy Palms, the CEO of Resolution said. “You have to be if you live in this space, where [there are] few hits and they don't typically make as much money as they would in other ecosystems.”

No matter how prudent the management, no game studio survives if the games aren’t good, and Resolution’s games are very good, often in ways that seem counter-intuitive to what we thought VR games would be. “A big grand virtual world, like Cyberpunk or Grand Theft Auto, but you’re inside it... now we know in reality, that's not a very comfortable experience, unfortunately,” Palms said.

Instead of that immersive world, Demeo puts players at a game table in a virtual basement with their friends. You’re not in a dungeon; you’re a person playing a game about a dungeon. “It creates a much more social situation in general because it increases the chance for you to play with your friends,” Palms explained. “You're doing something together, solving a problem or focusing on something else, you're just with your friend.”

I checked in on Meta's Horizon Worlds, and it feels dead

Speaking of friends, if Mark Zuckerberg’s original vision of the Metaverse was about anything, it was about bringing people together. “Feeling truly present with another person is the ultimate dream of social technology. That is why we are focused on building this,” Zuckerberg wrote in his Founder’s Letter in 2021.

Central to that vision was Horizon Worlds, a digital ecosystem designed to draw a billion residents and hundreds of billions of dollars in digital commerce. It's been nearly five years since launch and Horizon Worlds' overall cost-per-user likely outpaces the GDP of small nations, so I wanted to check out how it's doing; experiencing an environment that weird is more than enough motivation to strap on the old face-computer and poke around.

Horizon Worlds, circa 2026, feels dead. But dead in a unique way. Tens of thousands of “worlds” have been created by both users and corporations, and they're shiny, bright, and open to explore, but not many people seem interested. Randomly picking worlds is like walking around in an abandoned mall—stuff, but no people. If you're into "liminal spaces," you will never run out. Still, like the headsets it's played on, Horizon Worlds is really good.

Take The Office World, an official recreation of The Office's Dunder Mifflin, right down to the desktop tchotchkes. You can walk into Michael Scott’s office and pull games up on his computer, sort mail for Schrute Bucks, or go downstairs to check out the warehouse. The Office World is filled with the kind of cleverly written fan-service details that should draw droves of The Office faithful to hang out and meet each other. But they don’t. During the half hour I spent in The Office World at 2:00 PM on a Tuesday, the population count never got above five people. It's lonely in there, like a water cooler with no co-workers around it or an empty film set with no one there to call “action.” 

I had a similar experience at Blumhouse Horrorverse, an atmospheric, shadowy forest clearing surrounded by spooky buildings. It's filled with things to see and do for fans of Blumhouse properties like M3GAN, The Purge, and The Black Phone. You can play a game where you’re locked in a mansion with a player-controlled villain, or search for hidden Easter eggs to unlock M3GAN’s signature dress for your avatar. But the woods were so quiet. The few people I encountered were either very young children—the "squeakers" that haunt every corner of Horizon Worlds—or first-timers who wandered around in silence before vanishing like ghosts.

But I found signs of life in the digital ruins

I was about to call quits on my virtual safari, but I thought I'd check out one last world. A search for "over 18" (damn squeakers) brought up The Soapstone Comedy Club. I'm glad I visited. The spot is alive. There's a full schedule of upcoming stand-up shows, trivia, improv, and karaoke—and more importantly, there are people hanging out. Upon logging in, a friendly volunteer introduced herself, and before long I was chopping it up about life, online and off, with a bunch of new pals on the patio of a virtual comedy club.

"If you told me 10 years ago that I was going to be known as 'The Unemployed Alcoholic,' and I would own a pretend comedy club in a cartoon land, I wouldn't have believed you," Aaron Sorrels, know as "TheUnemployedAlcoholic" online, told me. "And I sure wouldn't have believed I could sell my wife on the idea," he added.

In recovery and unemployed, Sorrels watched that now-infamous Facebook Connect event in 2021 that launched the Metaverse, and rather than clowning on it because the avatars didn't have legs, Sorrel was inspired. "It sounds almost hokey," Sorrels said, "but I heard about the Metaverse, specifically Horizon Worlds, and I was like, 'I got to get in there.'"

With no background in programming, Sorrels built Soapstone from the ground up, creating a career for himself, paid gigs for others, and more importantly, a place for people to belong, just like Zuckerberg envisioned. "I came in to build a comedy club, and what's ended up coming out of it is more than a comedy club. There's a community of people that have adopted The Soapstone as theirs" Sorrels said. "It's not a corporate place, or someone else's place. This place belongs to them."

"In the Soapstone, I can host shows, step on stage, or instantly connect with friends and family members who live thousands of miles away as if they were right here in the same room," explained Soapstone Community Lead LollyDee. "It’s especially meaningful for people with anxiety, physical limitations, or those who live far from social hubs. For many of them, Soapstone Comedy isn’t just entertainment, it’s their social space and sense of community."

So, is virtual reality dead?

Sorrels definitely doesn't think VR is dead. "There are dynamic and powerful things happening every day, every moment of every day in VR," Sorrels said. "I think back on what I heard Mark Zuckerberg say four years ago... he said it was a 10-year process. We're not halfway through it yet."

The loud, anarchic vibe of VRChat is too much for me, but about 40,000 (mostly young) people use it to connect every day. Big Screen has a healthy user base of VR cinephiles checking out 2D and 3D movies. People are virtually beating each other up 24/7 in Thrill of the Fight 2. I could go on, but you get the picture: VR might not have broken big, but specialized communities are thriving in all corners of the metaverse.

In 2026, the "Next Chapter of the Internet" version of the Metaverse, where we would all would live, work, and buy digital sneakers, is something of a ghost town. But a more sustainable, organic space is taking root. VR isn't a second world; it’s a group of specialized tools for specific passions—a private IMAX theater for the cinephile, a global open-mic night for would-be comedians, a tactical tabletop for D&D nerds. VR isn't everything to everyone, but it's something to someone, and there's nothing more alive than that.