Spaces, a VR startup that got its start as a DreamWorks Animation project, has been acquired by Apple, Protocol has learned.

Apple confirmed the acquisition after this story was first published. "Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans," a company spokesperson told Protocol via email, using the company's usual boilerplate statement to confirm startup acquisitions.

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Spaces did not immediately respond to a request for comment.

Spaces announced that it was shutting down its existing services last week, telling visitors of its website that it was "heading in a new direction," without revealing further details. "Thank you to our users and partners who participated in our awesome VR video conferencing product and the many people who enjoyed our VR location-based entertainment attractions found at theme parks, theaters, and more," the statement concluded.

Spaces spun out of DreamWorks Animation in early 2016, and developed a range of location-based VR experiences, including "Terminator Salvation: Fight for the Future." The company had to shut down its VR centers at the beginning of the pandemic, laying off some staffers in the process, and took a small PPP loan to keep the lights on. "COVID-19 felt like a tsunami for us," Spaces CEO Shioraz Akmal told Protocol at the time.

Spaces then pivoted to build a VR add-on to traditional video conferencing solutions like Zoom, allowing Zoom users to take part in meetings with an animated avatar. "We like to keep busy making things," Akmal said back then. "We can't sit around waiting a year for something to return."

Apple has been working on its own AR/VR headset for some time and has acquired a number of AR and VR startups to build out its staff for the project. Other recent acquisitions in the space include NextVR, Akonia Holographics and Vrvana. Apple has yet to officially acknowledge plans to launch such a headset.

It's still unclear whether the Spaces team will actually work on VR at Apple. Either way, the exit is a bad omen for the location-based VR industry, which has been struggling to survive through the pandemic. Just last week, news broke that fellow location-based VR startup Sandbox VR had filed for bankruptcy.

Update: This post was updated at 7:40 p.m. PT to include Apple's statement.