Meta, formerly known as Facebook, reported a loss of $2.81 billion on $452 million in revenue from its virtual reality division, Reality Labs, during the second quarter 2022. The first quarter was also marked with losses, but Zuckerberg refuses to give up his metaverse dream.
Oculus VR headset. Source: Unsplash.
The losses seem substantial but affordable for the company that earned $8.36 billion in operating income on $28.82 billion in total sales during the quarter. The determination to spend on the virtual reality division proves that CEO Mark Zuckerberg and Meta are planning to pivot their metaverse at all costs.
Zuckerberg believes that virtual and augmented reality headsets will be the next-generation computing platform and is willing to spend heavily on the technologies that may take decades to develop. For Meta, this is a competition with Apple, who are planning to announce their first AR headset later this year. Google, Microsoft and other companies in the industry are also working to develop their own systems. This is what Mark Zuckerberg said during the Q2 2022 Meta earnings call:
“I’m just trying to lead the company in a way where we’re positioning ourselves as the premier company for building the future of social interaction and the Metaverse.”
The recent losses follow over $10 billion spending spree by the metaverse unit in 2021, but Zuckerberg isn’t worried, as it’s all part of the plan. Meta’s Horizon Worlds, the centrepiece of the company’s metaverse strategy, hasn’t yet contributed to revenues, but shows some progress. Last year Meta rolled out Horizon worlds VR app, and now they are working on the release of a web version to share the experience with users without VR headsets.
Still, Zuckerberg admitted that because of rising metaverse investments, Meta’s overall profitability won’t be as strong as it could be in 2022. But Reels on Instagram and Facebook are showing impressive growth, so Meta’s CEO is confident about potential revenue growth.
But what does the crypto world say about the future of Meta’s metaverse? The creator of Etherium, Vitalik Buterin doubts that corporations like Meta can one day build a metaverse. He also points out, in response to a tweet, that metaverse-focused companies are likely to fail in their endeavours because “it’s far too early to know what people actually want.”
Well, with the current numbers Meta has to go a long way to prove Buterin wrong. Let’s further observe what the future holds for Meta’s metaverse.