Cloudhead Games, the studio that brought fans Pistol Whip and other VR titles, has been hit with layoffs due to “industry forces beyond our control,” says Denny Unger, CEO of Cloudhead Games.

In a post on X, Unger shared that the studio has made the very difficult decision to reduce its workforce, letting go 70% of its employees effective January 7th, with the remaining 30% of staff continuing the mission.

“The team leaving us are consummate professionals and wonderful people in general. We took great collective pride in creating a culture that was as caring about VR content as it was about supporting each other,” Unger began.

“The general downturn of the gaming industry, VR’s still‑nascent challenges, including a lack of platform funding, have placed us in an impossible position. And while we’ve done all we can to reinvest in our people and VR’s future from prior success, we can’t build ‘bigger swings’ alone.”

Cloudhead Games has been creating VR titles for 14 years. They continue to believe in the power of VR as a medium with mainstream relevance and in future devices that will do everything. Unger mentions that until that time comes, “it will take studios like ours to be there.”

The studio was said to employ approximately 50 people and will now be reduced to around 15. When VR first launched, it brought an exciting new buzz that many - myself included - jumped into. However, over the years, many users began to dislike the feeling of a device covering their face or, worse, experiencing motion sickness. VR isn’t for everyone, but there is something special about it: a new way to experience a series that you may not have thought possible before. However, as Unger mentioned, they can’t create games alone - they need funding to help bring their vision to life.

With Sony seemingly leaving the VR space altogether - R.I.P. to the PS VR2 - Meta remains the main source for VR users. Valve, on the other hand, is preparing to launch its next headset. Will it be a shining light in the VR space for players and creators? Time will tell.

The video game industry is a tough landscape, but it’s even tougher in a small, niche space like VR. Our hearts go out to everyone affected by the layoffs at Cloudhead Games, and we hope they land back on their feet soon.

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