Ok, maybe the title is a little overdone, but if you’re in touch with tech news at all, you know that one of the biggest studios for VR films over the past two years has been about the Oculus Story Studio. The VR film studio has produced three films in total, all of which have received widespread critical acclaim (Lost, Henry, and Dear Angelica) and are still some of the best known and most appreciated VR films to date. However, this week the Facebook-owned company announced that they would be shuttering the studio, and diverting the approximately $50 million over the next two years into funding new studios to do the same work.

The announcement does not come as a surprise to many, since the events of this year have not been in Oculus’s favor. In February, Oculus lost a huge settlement against one of their chief competitors ZeniMax. The loss was a huge hit for Oculus, and the total judgment of $500 million is a major blow to the company. The judgment surrounded the Oculus co-founder Scott Luckey who, according to jurors, did not comply with the non-disclosure act that he had signed previously. Further, the company, as well as the CEO received hefty judgments for false designation. The CEO (Iribe) had already announced plans to step down from his current position and move toward a PC based VR position in the company. Obviously Oculus plans to appeal the decision and they were upbeat about the jury’s findings regarding trade secrets. Regardless, though, the immediate reality after February was that they needed to make some sort of change in their business model.

The movement this week should give the VR world pause. Without question Story Studio was one of the, if not the biggest, VR studios in the marketplace, and it’s closure signals a shift in the focus of Oculus, and it’s parent company Facebook. While such a move certainly doesn’t spell disaster for the VR industry as a whole, the reality that the biggest player has vacated the market does leave a very large pair of shoes to fill for other companies. A spokesperson for the company did offer some hopeful good news. First, Oculus will continue to support Quill, the illustrating software developed for Story Studio. Further, Oculus will continue to actively support the VR marketplace, but only through funding. “We’re still absolutely committed to growing the VR film and creative content ecosystem, but now that a large community of filmmakers and developers are committed to the narrative VR art form, we’re going to focus on funding and supporting their content,” said the spokesperson for Oculus, VP Jason Rubin.

Whether Oculus was a budding VR empire or not, it’s terrific rise over the past two years and it’s sudden production demise may signal some of the events coming for other VR studios. Certainly the market will remain intact, but the vacuum must either be filled, or collapse due to unmet demands.

For more Virtual Reality news, check out The Future is Now: Facebook’s VR Revolution Has Begun