The term “metaverse” was mentioned only seven times in Meta’s quarterly earnings call recently, compared to 23 times for “AI,” but the company’s investment in its vision of a VR-connected social future remains massive.
Meta began separating its Reality Labs VR and AR division into its own segment for financial reporting purposes in 2021. This allows us to see how much Meta is investing in those areas, and the figures are staggering.
Meta reported $13.7 billion in operating losses for Reality Labs in 2022, an increase from the previous year’s staggering $10.2 billion. Reality Labs made $2.16 billion in revenue last year, down from $2.27 billion in 2021.
Remember that Meta paid $2 billion for Oculus, the pioneering VR hardware company that laid the groundwork for its efforts, back in 2014.
The company’s investment in the area has only grown, with the company acquiring a number of major software companies, including the creator of Beat Saber and now Within, developer of the virtual workout app Supernatural.
Meta has not disclosed Reality Labs employee numbers, but the division reportedly had 17,000 employees prior to layoffs late last year. The majority of the money spent in the area is on staffing and hardware development.
Meta CFO Susan Li said that the company expects its annual losses for Reality Labs to be even higher in 2023.
“…We’re going to continue to invest meaningfully in this area given the significant long-term opportunities that we see,” Li said, calling its AR, VR and metaverse software efforts “a long-duration investment.”
Meta intends to release a next-generation consumer headset later in 2023, similar to a redesigned version of its Quest hardware with mixed reality.
Apple, one of the few consumer-focused companies in the sector poised to compete with Meta, is widely expected to release a new AR/VR headset soon.
In a recent week’s earnings call, Meta CEO Mark Zuckerberg emphasised the company’s Reality Labs division, which includes AR, VR, and metaverse-related software (Horizon Worlds, for example).
“I think the software and social platform might be the most critical part of what we’re doing, but the software is just a lot less capital-intensive to build than the hardware,” Zuckerberg said.
To appease sceptical investors, Meta may publicly downplay its metaverse efforts, but the company appears to be sticking to its VR and AR plans.
“… None of the signals that I’ve seen so far suggests that we should shift the Reality Labs strategy long term,” Zuckerberg said. “We are constantly adjusting the specifics of how we execute this, so I think that we’ll certainly look at that as part of the ongoing efficiency work.”