The Oculus Story Studio will no longer create its own material but will now help others make VR-ready content.
The studio won several awards for its short VR-ready films, one of which, called Henry, about a hedgehog's birthday party, won an Emmy.
The company has set up a $50m (£39m) fund to pay for non-game content.
It said the closure of the studio did not mean it was abandoning movies and films made for VR.
