Harry Potter VR Game Reportedly Cancelled Amid Meta Budget Cuts

By
Scott Hayden
-
28

Meta has closed at least three of its XR studios, and seems to have also drastically reduced its budget for third-party Quest content too, reportedly including a now-cancelled Harry Potter VR title.

The News

In his latest video, YouTuber ‘Gamertag VR’ maintains Skydance Games, the makers of Skydance’s Behemoth (2024), was working on an official Harry Potter title set to be exclusive to Quest. At least, that was before Meta ostensibly pulled funding to a number of third-party studios earlier this week.

Skydance hasn’t publicly announced work on the game, however Gamertag cites a “very reliable source” that a Harry Potter VR title was indeed in the making before Meta pulled the plug. We’ve reached out to Skydance and will update this piece when/if we hear back.

You can see Gamertag’s video below:

Additionally, Gamertag maintains that the recent Cloudhead Games layoffs, which affected 70 percent of the veteran XR studio, also came as a direct result of Meta pulling funding.

Cloudhead Games, the studio behind rhythm shooter Pistol Whip (2019), announced in 2024 it was working on two new games, the status of which is still under wraps.

It’s said Meta had already invested $60 million meant to fund new exclusive content for Quest this year.

SEE ALSO
Apple Reportedly Accelerates Smart Glasses Development Amid Wider Push for AI Hardware

My Take

In a vacuum, pulling funding from a single massively recognizable title like Harry Potter is worrying. But cutting what appears to be most, if not all of its gaming efforts signals a much bigger shift in the landscape. Meta is doubling down on smart glasses and AI, while VR and its metaverse ambitions are taking a back seat—and everyone is still digesting that, yours truly included.

While Meta reportedly axed 10 percent of Reality Labs in the process, the company even seems to be counting their XR pennies in a way we simply haven’t seen. XR hardware analyst Brad Lynch claims Meta layoffs also affected “some individuals who were running Meta’s Horizon Start Program,” which is tasked with funding independent XR developers—a tool the company used over the years to not only seed goodwill in the dev community, but amplify content that may not have existed without the expectation of platform exclusivity.

As for the veracity of Gamertag’s report: we’re only a year away from the release of the new Harry Potter HBO series, set to kick off in 2027. It makes sense to me that the IP would be everywhere in effort to maximize eyeballs, making an official Quest title a pretty logical extension to the forthcoming attempt at rekindling Potter Mania.

And I can’t think of any other studio with deeper ties to traditional media than Skydance Games, which also developed The Walking Dead: Saints & Sinners VR franchise. Notably, Skydance Games’ parent company is Paramount Skydance—the result of a merger last year between Paramount Global, National Amusements, and Skydance Media.

That said, I expect to hear more in the coming days from insider sources, which of course we’ll be reporting on here, so check back soon.

If you’re an affected developer looking to talk on or off record, drop us a line at tips@roadtovr.com

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Scott Hayden
Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 4,000 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • NL_VR

    So both Harry Potter and Batman in the bin. Sad day

    • ErickTheDiver

      Why not just finish the projects and announce nothing new afterwards? So much wasted talent and money.

      • Christian Schildwaechter

        Publishers often cancel (almost) finished projects because marketing makes up 25%-50% of the total budget, regularly more than the game development itself. So if they don't expect to sell enough copies, they directly cut their losses instead of adding more costs.

        Meta worked somewhat differently, they didn't launch huge advertising campaigns and didn't even expect games to make back their development costs, their "payment" was growing the user base instead. Batman: Arkham Shadow basically sold nothing because it was bundled for free with new Quests for a year.

        Now that Meta has pretty much given up on games to drive up user numbers or Quest reaching a mass market, they no longer have anything to gain from finishing these projects. And we don't know how close to finishing they actually were, so it might still have taken several millions and a lot of time to release something that was started with a goal that Meta no longer has. This of course sucks for both gamers and esp. the developers working on them, but is something that happens rather often in the game industry, even though from the outside it looks like unnecessarily waisting the already made investment.

  • ErickTheDiver

    Welp, jumping off the Meta ship moving forward. Still not giving up on VR though.

    • sfmike

      That's OK because the industry has given up on VR. They see the future in AI glasses to cause permanent brain rot with the goal of you being surrounded by ads during your waking hours making them more profit for the only people that matter in the world, their greedy investors and of course their now right wing politically connected CEO.

      • Octogod

        Weirdly, it is so worse than even that.

        These glasses can identify everything in your world. It can hear what you're saying. It knows the GPS location of your movements. It can easily be modified so it can't record. And all of this is a service you pay to opt into so the data is associated with your real name, social accounts, just to sell you more stuff.

        • xyzs

          I would NEVER buy AR glasses from Meta for this reason. Zuck himself wouldn’t use them because he knows that he would give a way too risky access to his personal life with such a product.

  • Nothing to see here

    Meta fails to understand Apple's lesson: It's not the product, it's the ecosystem. My interest in Meta's AI glasses was due to the fact I used my Quest 3 every day. If the Quest goes away, so does my interest in Meta's other products.

    • Christian Schildwaechter

      So far there is no connection between Meta Quest and Meta Ray-Ban glasses. Their use cases are completely different, they run completely different software, and at best Meta was able to recycle some of their algorithms on the ultra-low power smartglasses. But most likely everything they created for Quest was way to compute expensive.

      There simply exists no ecosystem like it does for Apple with central services shared between Macs, iPhones and AVP, and there is nothing on the Horizon(OS) hinting that would change within the next few years. Which apparently wasn't a problem, as the Meta Ray-Bans are a surprise hit, with most likely almost no overlap between Quest and Ray-Ban buyers.

      So if your interest in Meta smartglasses was bound to Quest, this is about brand loyality, not about (non-existing) ecosystems. It's like saying you don't want to buy a Samsung fridge anymore, now that Samsung RAM has become so expensive, because this destroyed the ecosystem you were counting on.

    • Andrew Jakobs

      I'll bet they sure as hell know damn well as the (rayban) AI glasses seem to sell much better as the Quest, and mostly to non vr-users..

  • STL

    I would love to buy Harry Potter on Steam PCVR. Quest 3 with its limited resources isn’t my first choice anyway.

    • Andrew Jakobs

      Hogwarts legacy with UEVR is the closest you'll probably get.

      • STL

        Tried it for many hours. Horrible experience. Camera keeps on moving, no FPV, controllers do what they want, menues are strange. And with each update it got worse.

  • Christian Schildwaechter

    TL;DR: The sky isn't falling.

    This is the current sales top 20 on the Horizon store:

    1. UG
    2. Gorilla Tag
    3. Beat Saber
    4. Yeeps
    5. Animal Company
    6. Blade & Sorcery: Nomad
    7. FitXR
    8. BONELAB
    9. GOLF+
    10. VRChat
    11. I Am Cat
    12. PokerStars – Vegas Infinite
    13. TAXI DRIVER VR
    14. Virtual Desktop
    15. Rec Room
    16. I Am Monkey
    17. Five Nights at Freddy's: Help Wanted
    18. Roblox
    19. Marvel's Deadpool VR
    20. NFL PRO ERA

    AFAIK, only Deadpool VR was developed by a Meta studio. Beatsaber was bought by Meta after it had already become a cross platform VR hit. It's possible that some of the other titles received financial support from Meta, but overall Meta no longer creating games themselves won't change much. Simply because they focused on expensive high profile titles that other studios wouldn't touch, as they were unlikely to ever make their development costs back. But these aren't the games that the average Quest users are actually buying/playing.

    I'm somewhat surprised how many people now see doom and gloom due to what is clearly a cost cutting measure by Meta in reaction to their strategy of attracting lots of new gamers with high profile titles simply never having worked. Closing these studios and canceling already started projects will have a much smaller impact on the actual Quest games market than Meta slowing down hardware development and reducing Quest subsidies, and it's not like they are suddenly dropping out of VR.

    From the (intentionally?) leaked 2025-12 memo by Meta's new metaverse leads Gabriel Aul/Ryan Cairns:

    We’ve been working hard to bend the curve and accelerate ahead of the category’s natural growth rate, which means running multiple programs in parallel as well as carrying costs like tariffs and subsidies for content, GTM, and devices. […]

    Our devices will be more premium in price going forward, but we’ll have a healthier business to anchor on and free ourselves from feeling existential about any singular device’s success, […]

    We’re committed to VR for the long-haul so we need to align our business model and roadmap to an approach that will make this possible, […]

    So basically they tried to push VR by throwing money at it, saw that this didn't work, still intend to keep working on it, but at a slower pace ("the category's natural growth rate"). And they will most likely try to keep their current leading position by still offering the most affordable headsets. The adjustment is quite understandable after burning through USD 10B each year at MRL for rather limited results. They are simply trying to turn what was an expensive high risk bet into a (more) sustainable business.

    This will of course (at least initially) be somewhat unpleasant for Quest users that so far got their hardware for much less than it was technically worth. But hopefully this will longterm lead to a healthier VR market with more competition and more options to chose from. A market that companies engage in with realistically sized projects that may actually succeed, not because a platform owner pays them to create exclusive titles that will never make back their development costs.

    • Denny Unger

      You know that exhausted feeling when you have a relative or friend with a political or religious slant that just isn't worth "getting into"? That's what I feel when reading the above.

      • Christian Schildwaechter

        TL;DR: My perspective is based on a mix of longterm development and current "statistical" use of HMDs, which isn't necessarily what VR enthusiasts or studios already engaged at a higher level are looking for.

        I'm not 100% sure how to interpret your response, but I take it that I am the political or religiously slant friend, and that what I wrote about the VR market looks like the "This is fine" meme to you. Which would be understandable, given that you just got burned at Cloudhead by things out of your control, and had to let go most of your team. I've been through something similar on a much, much smaller scale, and it was heart wrenching.

        Getting financing for any game project is hard, getting financing for VR games close to impossible, so if the one remaining publisher/platform owner still willing to support medium sized projects pulls all the plugs at once, you are basically screwed. And if you already have a certain team size, you cannot simply go back to just do cheaper 2-3 person projects people do as side jobs.

        Me still being optimistic is largely based on having gone through a number of bust cycles myself, and having worked in lots of startups that no longer exist. I did (industrial) VR projects that died the moment the main sponsor lost interest, participated in smaller VR game projects that never got published. In the decades before I got burned at the worst possible time during the dot com bubble with a streaming audio startup, and saw lots of companies with good products go down, often just due to bad timing and running out of money. Audio streaming is big today, the internet bubble bursting didn't exactly stop the internet from flourishing, and death is just part of business.

        I often find myself arguing from the middle, urging for caution when people predict exponential growth, but also pointing to the light at the end of the tunnel when everything seems to go down the drain. Which probably doesn't help if you've just been run over by a train. But I fully expect consumer VR to survive this time (I was around for the first wave in the 90s), and still provide a lot of opportunities for game developers, even if Meta lied about being "committed to VR for the long-haul".

        If they dropped out completely, nobody would be able/willing to replace them. Valve is too small, Google really only interested in AI and smartglasses. Other small contenders like Play for Dream will most likely run out of the money they got during the short rush of new XR investments following AVPs introduction. Apple still invests a lot into AVP consumer content, found a temporary niche in professional XR, and will probably keep on pushing even while pursuing smartglasses, as these won't be able to provide the Vision media experience for more than a decade. In the (very unlikely) worst case It may end up like with tablets, with Apple the only company still trying, and clearly not caring about iPad gaming one bit. I still expect Meta to release a Quest 4 though.

        But even if not, good ideas usually prevail, and VR gaming provides an immersive experience that nothing else can match. That doesn't necessarily draw people used to playing games on phones, and is currently hindered further by lots of friction and discomfort. And even though I don't count on Steam Frame to become more than a niche product, I count on it to show that better balance and a smoother experience can make HMDs a lot more attractive. And their "VR plus flat plus streaming plus local gaming" hybrid hybrid strategy to somewhat close the gap between flat and VR gamers, and Sony's hybrid strategy with VR modes for larger games paid for mostly by the much larger number of flat gamers to long term make projects that so far required Meta to basically pay for them to be financially viable all by themselves. Game development has been declared dead over and over again for almost 50 years now, but it always comes back. And VR development will go on too, both for hardware and software, which have come far enough to attract at least a certain core of enthusiasts.

        In the short to mid term Meta's withdrawal will probably kill a lot of studios that so far cannot rely on ongoing sales only to pay for further developments, which are a lot. We will most likely see a scaling down of project scope, with many leaving VR althogether. Which of course sucks, and is rather unfair to those that for years have pushed VR when this was a very risky bet. I loved the Call of the Starseed and Heart of the Emberstone, and would wish that more people played/bought these types of games. I got really tense in Pistol Whip and would like you to have gotten the necessary time and resources to develop more projects. I really hope that you still find a way to keep things going and somehow adapt to this new VR world with even more obstacles than there already were before. And I also hope that this reply didn't just add more to what "just isn't worth "getting into".

        • Denny Unger

          Thanks Christian. There’s just a great deal that I can’t say which would probably change your perspective in a few areas. So my exhaustion when speaking about our industry is part circumstantial, part “if only people knew the reality”. One day I hope to give better clarity in a way that will help developers and consumers understand the landscape better but clearly, some of the writing is already on the wall.

    • philingreat

      Meta is shutting down their game Studios, Workrooms, and its Quest for business program in 2030. Why would a studio now bet on VR and develop a game when it's almost certain that a Quest 4 will never come out?

      • Christian Schildwaechter

        Betting on VR has always been dangerous and now became even more of a gamble, but there are still around 10M active Quest users out there, plus a couple of million SteamVR and PSVR2 gamers. So don't try to come up with the next HL:A unless you need to free some space in your safe overflowing with money. But a number of prominent VR games like "Superhot" or "Keep Talking and Nobody Explodes" came out of game jams, created within a few days (and then later polished for much longer). Gorilla Tag was created by a single person, so the actual entry/risk level can be kept rather low.

        I fully agree that Meta very openly withdrawing from a lot of their VR activities sends a very bad message, and makes what was already a hard job even harder, esp. for professional studios, which basically got stabbed in the back. But I still remember the early DK1 days with people creating tons of whacky demos, and I actually miss that wild west anything goes environment that was driven more by experimentation than commercial success (still mostly meaning just surviving). Yes, it sucks if you wanted to be a professional VR developer working on an RPG for a couple of years, but that wasn't that great an idea even before Meta cut all the funding, because that's not what Quest users were buying. And this has been a problem for most game developers for literally decades, it's not VR specific.

        I really don't want to excuse Meta here, but what is currently happening is a market correction. Quest has been artificially lifted up with lots of Facebook and Instagram ads money, never becoming sefl-sustainable. We may now get more games that look more itch_io than Nintendo, but I have a hard time condemning that. For a number of reasons I'm pretty sure that we will get a Quest 4, but I'm also fine with the Quest 3 having a five year life span. We have seen in the past on consoles and earlier on 8/16bit machines that devs get a lot better in using the same hardware, with games released at the end of the life cycle playing in a different league than at the start, and I hope to see that on Quest too. One of my favorite gaming devices from the last few years is the Panic Inc. Playdate as the very incarnation of the "game design over specs" idea, and the church of eternal growth sank rather quickly for Dennis Hopper, making place for something more sustainable. Plans change, with often painful results, but sometimes for the better.

    • namekuseijin

      gamers who want great games in VR see Doom and gloom. Investors who want profit see monkebois and smile.

      i can't care less for that top 10 most profitable tech demos or minigames listing…

  • Jonathan Winters III

    "VR and its metaverse ambitions are taking a back seat".

    Actually, kicked out of the car at full speed.

  • Cloudhead Games mentioned something related to funding in their layoff letter. Reading that, I immediately think about Meta, so what GamerTag says seems reasonable to me. That's a big bummer… many studios are going to get in trouble for these cuts.

    • Octogod

      The cuts for 95% of studios really happened years ago.

      Meta has focused on a select few highlight VR titles for funding since 2024, but these are only in tentpole marketing cases to try and delight their core or bring in new audiences with a known IP.

      For example, the Netflix app was developed by Meta. It was then plastered on boxes to lure in people who recognize this brand.

      The real challenge I think is Meta+. Many devs rely on these funds and with people believing VR is dead are not going to subscribe. As the Underdogs team founder said, this money is dropping and as it does, the only real source of revenue for these smaller shops is gone.

    • Christian Schildwaechter

      A lot of studios rely on contract work to pay for their own projects. So if for example Cloudhead Games had been contracted by Meta to create a game and had hired a lot of people to do this, they would not only have to lay of all these people the moment Meta pulled the plug, but would now also lack resources to finish their own project, with very few options to raise more money, given the not great at all state of the VR game publishing market.

      So Meta's actions can have consequences far beyond their own development projects, depending on how many studios were also doing some type of contract work for them. Overall this will be a minority, but many of the studios working on larger scale VR projects will be in that minority precisely because there were so few alternative sources of funding.

  • ZarathustraDK

    A-VR-da kedavra!

  • Ryth

    I wasn't planning on getting the steam frame since it doesn't have color. Pass-through and I do enjoy the AR stuff but if meta is going to try and kill off VR on their side I might as well jump ship.

  • xyzs

    … pff with the 400 millions wasted for buying supernatural, they could have funded like 50 quality games EASY.

  • STL

    Skydance might direct its efforts towards converting Hogwarts Legacy to VR! That would be far better than an „exclusive Quest 3 Harry Potter VR game“!