insiderblm
We counted only seven mentions of the “metaverse” in Meta’s quarterly earnings call this week, compared to 23 mentions of “AI,” but the company’s investment in its vision of a VR-connected social future is still enormous.
For the purpose of financial reporting, Meta started separating its Reality Labs VR and AR division into its own segment in 2021. It is now possible to see the staggering amounts of money that Meta is investing in those areas.
In contrast to the already staggering $10.2 billion it invested in the division in 2021, Meta reported operating losses for Reality Labs of $13.7 billion for 2022. Revenue for Reality Labs dropped from $2.27 billion in 2021 to $2.16 billion last year.
For context, keep in mind that in 2014, Meta paid $2 billion to acquire Oculus, the pioneering maker of VR hardware that laid the foundation for its efforts. The company’s investment in the sector has increased as a result of the acquisition of several significant software firms, including Beat Saber’s creator and now Within, the company behind the virtual workout app Supernatural.
Reality Labs had 17,000 employees before layoffs in the latter part of last year, according to reports. Meta hasn’t made available its headcount figures for the division, though. The majority of the money is spent on hiring personnel and developing hardware.
Susan Li, CFO of Meta, stated that the company anticipates even greater annual losses for Reality Labs in 2023. Li called its efforts in software for augmented reality, virtual reality, and the metaverse “a long-duration investment” and added, “We’re going to continue to invest meaningfully in this area given the significant long-term opportunities that we see.”
Later in 2023, Meta intends to introduce a new generation of consumer headsets, including a mixed reality update to its Quest hardware. It is widely anticipated that Apple will soon release a new AR/VR headset. Apple is one of the few consumer-focused businesses prepared to compete with Meta in the sector.
The company’s CEO, Mark Zuckerberg, highlighted the fact that Reality Labs includes Horizon Worlds and other software related to the metaverse during this week’s earnings call. The most important aspect of what we’re doing, in my opinion, is the software and social platform, but building software requires much less money than building hardware, according to Zuckerberg.’
To win over skeptic investors, Meta may publicly downplay its metaverse efforts, but the company seems prepared to stick with VR and AR.
None of the signals I’ve seen so far indicate that we should change the Reality Labs strategy in the long run, according to Zuckerberg. We are always changing the specifics of how we carry out this, so I believe we will definitely take that into account as part of our ongoing efficiency work.
