Cloudhead Games, the veteran VR studio behind hit rhythm shooter Pistol Whip (2019), announced that it’s laying off 70% of staff, making for at least 37 affected employees.

Cloudhead CEO Denny Unger released the news via a Bluesky post, explaining the decision was based a “downturn of the gaming industry, VR’s still nascent challenges, including a lack of platform funding.”

Unger, who co-founded the studio in 2012 alongside Tracey Unger, characterizes the decision as a “difficult choice,” noting the studio’s mission still includes the core belief in the power of VR and its coming mainstream relevance.

Unger maintains that mainstream relevance isn’t here yet though; when devices that “do everything” eventually arrive, it will “take studios like ours to be there.”

“Our ongoing priority is to find ‘the reason’ to use VR and we will continue on that road until we can no longer,” Unger says. He further notes that a future update will include more about the challenges and potential opportunities in the VR games industry.