Mentions of the “metaverse” were relatively rare in Meta’s quarterly earnings report this week — we counted just seven mentions compared to 23 for “AI” — but the company’s investment in its vision of a VR-connected social future remains colossal.
As of 2021, Meta began splitting its Reality Labs VR and AR division into its own segment for financial reporting purposes. That makes it possible to see how much Meta is flowing into those areas, and the numbers are staggering.
Meta reported $13.7 billion in operating losses for Reality Labs for 2022, more than the already staggering $10.2 billion it sunk into the division in 2021. Reality Labs brought in $2.16 billion in revenue last year, down from $2.27 billion in 2021.
For the sake of scope, remember that Meta bought Oculus – the pioneering VR hardware company that was the foundation of its efforts – in 2014 for $2 billion. The company’s investment in the area has only escalated, with the company picking up a number of large software companies. including the creator of Beat Saber and now Within, developer of the virtual workout app Supernatural.
Meta has not disclosed its workforce for Reality Labs, but the company reportedly did 17,000 employees in the division prior to the layoffs at the end of last year. Human resources and hardware development account for the lion’s share of money spent in the area.
Meta CFO Susan Li said the company expects annual losses for Reality Labs to be even higher in 2023. “…We are going to continue to invest meaningfully in this area given the significant long-term opportunities we see,” said Li, who called his AR, VR and metaverse software efforts “a long-term investment.”
Meta plans to launch a next-generation consumer headset later in 2023, such as a revamped version of its mixed reality Quest hardware. Apple, one of the few consumer-facing companies ready to compete with Meta in the industry, is expected to launch a new AR/VR headset soon.
On this week’s earnings call, Mark Zuckerberg, CEO of Meta, highlighted the fact that Reality Labs includes AR, VR, and metaverse-related software (Horizon Worlds, etc.) at the company. “I think the software and the social platform are perhaps the most critical part of what we do, but software is just much less capital intensive to build than the hardware,” Zuckerberg said.
Meta may publicly emphasize its metaverse efforts to appease skeptical investors, but the company seems poised to stay the course on VR and AR.
“…None of the signals I’ve seen so far suggest we need to change the Reality Labs strategy in the long run,” Zuckerberg said. “We’re constantly tweaking the details of how we run this, so I think we’ll definitely look at that as part of the ongoing efficiency work.”
