Meta’s metaverse unit Reality Labs suffered a loss of $3.7 billion during the third quarter. This poor performance comes after a hiring freeze, an increase in shareholder scrutiny and a push to sell virtual-reality technology solutions to corporate clients.
Meta, a Facebook owner, reported that Reality Labs, its metaverse division, suffered a loss of $3.7 billion in the third quarter.
Reality Labs’ total year-to-date losses now stand at $9.4 billion. Meta stated that Reality Labs’ operating losses are not expected to grow in the next year.
Meta reported Reality Labs’ revenue of $285 million for the quarter, a decrease from $558 million last year. The company’s “Family of Apps”, which includes Instagram and Facebook, generated $27.4 Billion in revenue.
Meta, which is not part of Reality Labs, continues to generate strong advertising revenues quarter-after-quarter through its core apps businesses, Facebook, and Instagram. Meta’s market capitalization dropped to $350 million last year after it surpassed $1 trillion.
As Meta continues to prioritize its metaverse ambitions over its core business, storm clouds have been gathering throughout the year.
Recently, Altimeter Capital Management’s CEO, Meta shareholder, suggested in a blog that the company reduce its workforce by at least 20%. This was in addition to reducing investment. Reality Labs should be limited to $5 billion per year. A month ago, Zuckerberg informed employees that he was stopping hiring and reorganizing teams in order to cut costs.
During an earnings conference call with analysts, Mark Zuckerberg explained that his metaverse strategy extends beyond the company’s efforts in developing its virtual reality business. He stated that Meta’s goals include research and development projects aimed at developing augmented reality technology and neural interface technologies.
Zuckerberg stated that while he understood that not everyone agrees with the investment in the metaverse, he believes it to be an invaluable thing. It would be a mistake to not pay attention to these areas that I believe are fundamentally important for the future.
Zuckerberg has worked tirelessly for over a year to promote his vision of Meta’s future. It all hinges on the company being able to create its own version of the metaverse. This immersive digital space, where people can socialize, work and play games, is what Zuckerberg wants.
Horizon Worlds is Meta’s virtual-reality platform flagship. It has struggled to attract large numbers. According to a report by The Wall Street Journal, less than 200,000 people visit Horizons each month.
The platform is just a little more than a year old. However, it seems small compared to Instagram and Facebook, which together boast over 4 billion users.
At the company presentation Meta Connect, Zuckerberg reiterated his desire to play a key role in building a Metaverse. This business idea is still in its infancy and will likely take many years to develop fully. He unveiled a new, better virtual reality headset that he hopes will attract more people to the metaverse.
Zuckerberg spent large of Meta Connect extolling the virtues and use of virtual reality for work. This included the announcement of strategic partnerships with Microsoft and Zoom.
Zuckerberg stated that there are approximately 200 million people who buy new computers each year. “Our goal for the Quest Pro range over the next several decades is to enable more people to do their work in virtual and mixed realities.” The new Quest Pro VR device from Meta will cost $1,499.
Analysts have predicted that the metaverse will be worth trillions, despite many criticisms of Meta’s strategy.
Meta’s problems dealing with regulators are not a new problem, aside from some disagreements about strategy. The Federal Trade Commission recently contacted the company. In July , the agency filed a suit vs. Facebook alleging that the company is trying to take over the metaverse.