While most of the XR roundups have been quite pessimistic lately, there’s an equally large amount of good news emerging from the yearly data. And since the media generally tends to focus more on the negatives, it’s only fair to amplify some of the more positive developments that go largely unnoticed.

The Headwinds: Layoffs and Negative Narratives

To put the negative coverage into perspective, in just the last few months, we heard about Apple halting the production of Apple Vision Pro, Meta Horizon app downloads being down 21% year-on-year, and a wave of layoffs hitting some of the best-known VR studios.

This is all somber news, even if often misrepresented. Apple is not canceling the Apple Vision Pro, as some reported, but rather letting warehouses clear the backlog of unsold units. It might resume production if necessary, as they work on a cheaper, cut-down version of the Apple Vision Pro continues according to schedule. In the same vein, Meta Horizon app downloads are 21% down only if we focus on December peaks. In a complete year-over-year comparison, Meta saw 7.8 million downloads in 2023 against 7.6 million in 2022, so that’s actually a 2% increase. Modest, but far from the 21% decline many assume.

The layoffs at VR and XR gaming studios are a bit less ambiguous. It’s true the industry has just experienced an unusually large wave of cuts, with nDreams laying off 17.5% of its staff, XR Games laying off 86%, Fast Travel Games cutting around 60% of its workforce, and Toast Interactive cutting almost all of its staff. And that’s just to name a few. Some developers are blaming Meta’s heavy focus on games with a free-to-play model, their own Horizon Worlds ecosystem, and non-curated minigames, while others point to a broader swath of job cuts happening throughout the gaming sector.

While every significant round of layoffs in the XR industry is regrettable, the amount of negative press these cuts have generated is still quite surprising. Even low-key announcements, such as FuturLab ending support for Powerwash Simulator VR, were fed into this negative narrative.

The Tailwinds: Engagement and Revenue

Meanwhile, in terms of retention and engagement, the year 2025 is shaping up to be not just a good year but the best one yet. We have already seen the beginning of this trend in 2024, with a slew of new apps that are starting to challenge Gorilla Tag — the so far undisputed king of engagement and revenue. For those unfamiliar, Gorilla Tag is the first Meta Quest app to reach one million active daily users and surpass 100 thousand reviews. Its developers, Another Axiom, made over $100 million in revenue in the process.

What took Gorilla Tag years to achieve (the game was released in 2022, or 2021 if we count App Lab) has been achieved in a matter of months by a number of unfamiliar titles, all released in 2024. Yeeps VR (released in July 2024) has already amassed 69.6K reviews, I Am Cat (December 5, 2024) 60.7K reviews. Meanwhile, DigiGods (December 12, 2024), despite almost no marketing, has achieved 22.2K reviews.

Moreover, unlike Gorilla Tag, I am Cat is a paid title, retailing for $20. This dumbfounded some gaming industry experts, for it means an unassuming indie studio from Cyprus might have quietly netted $100 million dollars. PushToTalk conducted a very good in-depth analysis of I Am Cat, and their findings suggest that the developers have made at least tens of millions, with a high likelihood that the $100 million figure is also accurate.

Looking at the top 20 most reviewed apps on Meta Store we see most are from 2024.

There’s an important caveat here. PushToTalk reports that the latest Quest games place a much greater emphasis on engagement numbers compared to earlier products, achieving this through a variety of strategies, from offering in-game perks in exchange for ratings to amassing reviews in early access. These methods show shifting priorities among developers, with a greater emphasis on the virality of their products, but they also skew the charts in favor of more recent titles. In fact, some studios consider these practices unethical and are urging Meta to take action. Even with this caveat, however, it’s obvious that 2024 was a big year for the Meta Quest ecosystem in terms of retention and engagement.

So far, the year 2025 is promising an even wilder trajectory. In the span of one month, Animal Company rapidly doubled its review numbers from 30 thousand to 60 thousand, launching it into the top five most-reviewed apps of all time with more than one million active monthly users — especially impressive considering February is traditionally a slow month for Meta.

A few days ago, we learned that Animal Company was also this week’s highest-earning app, causing Gorilla Tag to drop to second place. Generally, we’ve never seen this kind of volatility in XR. With young, new cohorts of users seemingly moving from app to app by the hundreds of thousands, developers must quickly adapt to what is both an opportunity and a challenge.

These changes in trends have also been confirmed by Samantha Ryan, VP of Metaverse Content, who mentioned that the Quest 3S is, on average, used for longer than “any other headset at launch” as well as by Andrew Bosworth in his leaked memo.

These changes in trends have also been confirmed by Samantha Ryan, VP of Metaverse Content, who stated that the Quest 3S is, on average, used for longer than “any other headset at launch” and by Chris Pruett in his recent GDC talk, where he noted that customers spent ‘30% more monthly time in VR in 2024 than the previous year.”

The Gap: Meta versus the Rest of the Industry

So is the bad news mentioned earlier irrelevant? Not exactly. Many XR studios have indeed experienced reductions, and it’s also true that low demand for the Apple Vision Pro has disappointed many. The Meta Quest ecosystem is showing strength, but other headsets like Pico, Vive, and PSVR are not benefiting from the same rates of adoption. Everything points to 2025 possibly being the best year yet for Meta’s XR division. However, whether the year 2025 will be as generous to the rest of the XR industry remains an open question.

Mat Pawluczuk is an XR/VR writer and content creator. As with all AR Insider contributors, his opinions are his own.

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