Four years in, Meta has burned through $45 billion chasing its metaverse dream

[zohaibahd]

Bottom line: More than four years after Mark Zuckerberg rebranded Facebook as Meta to chase his metaverse vision, the company has poured tens of billions into the effort – with little to show for it. The ongoing losses have raised serious doubts about the strategy and its long-term viability.

Insiders say the metaverse project has become a financial sinkhole, consuming $45 billion by early 2025. That's nearly equal to the combined market caps of social media rivals Snap and Pinterest – or the amount Elon Musk paid to acquire Twitter. Worse, Zuckerberg warned in last year's earnings report that losses would continue to "increase meaningfully," whatever that means.

Yahoo Finance spoke to over a dozen former high-level Reality Labs employees, who described the wing as dysfunctional and disorganized. Frequent leadership changes and constant reshuffling reportedly sowed chaos, with many managers brought in from other Meta divisions despite lacking AR and VR expertise.

One former research employee described the work environment as "chaotic," with "local heroes" from divisions like Instagram promoted to lead virtual reality teams despite lacking relevant experience. Another ex-staffer said Meta recklessly "plays employee bingo," assigning AR and VR roles to people who "don't really understand it." This combination of unqualified leadership and an unclear product strategy has significantly contributed to the division's staggering losses.

Financial disclosures show the branch's losses have surged over the last several years – more than $6 billion in 2020, $10 billion in 2021, $13 billion in 2022, and $16 billion in 2023. The division lost another $3.8 billion in just the first quarter of 2024, wiping out its total revenue from 2022 and 2023 combined.

Despite rising expenditures, the division's annual revenue has declined steadily since 2021 due to weak sales and continued failure to gain mainstream traction. Wall Street analyst Gene Munster of Deepwater Asset Management told Yahoo Finance that the division is a "financial disaster" dragging down Meta's stock.

While some investors have remained patient, betting on the long-term promise of AR and VR, that optimism is starting to fade. Barring rapid mainstream adoption, losing $10-15 billion annually on Zucckerberg's metaverse pipe dream is unsustainable.

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Four years in, Meta has burned through $45 billion chasing its metaverse dream

 

[FaTaL]

I dont know one person that uses metaverse. not one. and I know alot of people.

 

[FuryX]

Should have used that $45 billion in developing some open world games bigger than gta 6 or 100+ more high quality vr games...

instead they made some cheap crappy virtual room meeting simulator and a MMO with 2004 graphics that can abuse women characters.....$45B gone...lol

 

[WhiteLeaff]

They will burn 4-5x more with AI, despite the lack of financial return

 

[godrilla]

Should have used that $45 billion in developing some open world games bigger than gta 6 or 100+ more high quality vr games...

instead they made some cheap crappy virtual room meeting simulator and a MMO with 2004 graphics that can abuse women characters.....$45B gone...lol

Imo if they actually wanted people to use it and enjoy it, they would have to create a construct that is an escape of reality. Is it possible?
I have personally tried GeForce now ultimate tier and the experience was actually less baggy than anticipated. So if GeForce no can generate an acceptable experience for a PC enthusiast with the latest bells and whistles for $20 per month they could have made a unreal engine 5.x real time graphics with all the bells and whistles using all that hardware and resources to come up something enjoyable ( within a reasonable price subscription.
This proves that most corporations are made up of a bunch of yesmen.

 

[Lowhangingfruit]

I'm more surprised by the $2 Billion in revenue? Selling what? Is the Quest headset part of that? Must be cause I can't imaging what else they could be selling.

 

[Kirby1]

Imo if they actually wanted people to use it and enjoy it, they would have to create a construct that is an escape of reality. Is it possible?
I have personally tried GeForce now ultimate tier and the experience was actually less baggy than anticipated. So if GeForce no can generate an acceptable experience for a PC enthusiast with the latest bells and whistles for $20 per month they could have made a unreal engine 5.x real time graphics with all the bells and whistles using all that hardware and resources to come up something enjoyable ( within a reasonable price subscription.
This proves that most corporations are made up of a bunch of yesmen.

This would not work because the meta quest headsets actually render graphics locally and they are no where near powerful enough for UE5. While it can stream games from a PC, the meta verse runs locally on the headset.

It is really insane that they spent so much. I have a meta quest 3 and the meta verse is less interesting that a $2 indie game.

 

[godrilla]

I'm more surprised by the $2 Billion in revenue? Selling what? Is the Quest headset part of that? Must be cause I can't imaging what else they could be selling.

Maybe it's them Apple vision pro users who are accustomed to paying more. If you pay it they will build.

 

[pietklerckx]

Can someone explain where they spend so much money on in detail? I mean, 45 billion, that's an insane amount of money. And they are not building space rockets. For that money, they could have developed at least 100 AAA games and have a bigger ROI.

 

[godrilla]

Can someone explain where they spend so much money on in detail? I mean, 45 billion, that's an insane amount of money. And they are not building space rockets. For that money, they could have developed at least 100 AAA games and have a bigger ROI.

It's a growing trend to lose money. This is Concord x112.5.
In comparison Roblocks annual revenue is about 3.5 billion dollars, Minecraft 300 million dollars and Fortnite 1.8 billion dollars annually.

You can't even buy a meta gift card in most national chain pharmacies like CVS and Walgreens currently vs. The other competition.

 

[MarkHughes]

I dont know one person that uses metaverse. not one. and I know alot of people.

Same, I entirely forgot it existed until this article... But then, I have zero interest in Meta or any of their products as I don't really like adverts.

 

[human7]

I'm more surprised by the $2 Billion in revenue? Selling what? Is the Quest headset part of that? Must be cause I can't imaging what else they could be selling.

There's an app store, so apart from headsets there's revenue coming in from that.

 

[human7]

Same, I entirely forgot it existed until this article... But then, I have zero interest in Meta or any of their products as I don't really like adverts.

I created a throwaway FB account just for my headset, like how some people create throwaway Msft accounts just for W11. Even when we pay for their products we are still a product.

 

[VaRmeNsI]

I created a throwaway FB account just for my headset, like how some people create throwaway Msft accounts just for W11. Even when we pay for their products we are still a product.

Microsoft account for windows?

 

[AnilD]

The metaverse always felt like a solution in search of a problem. Without a compelling use case that resonates with regular people, even the best tech struggles to gain traction.

 

[Tom Yum]

Just imagine some of the world changing things that would have directly benefited millions of lives that the money could have been spent on, instead of this? Cancer treatment research, water sanitation, food security, internet access in Africa, etc. Instead it has been spent on a sh*tty Second Life knockoff and some subsidised VR headsets.

 

[kiwigraeme]

I dont know one person that uses metaverse. not one. and I know alot of people.

1, 2, 3, er um a lot

Even Apple timed their VR wrong , yet timed iPhone just right even though the initial demo was highly prescribed to stop a blunder

Weird how all these mega corps have these weird obsession. Google is notorious

Least the MS super expensive one was targeted at businesses

I realised vey early on it my school days most people are pretty ordinary.

Lots of high paid managers and CEOs are quite useless, ordinary or even worse damaging in their own beliefs to magnificent

We all know Nike, Adidas went to the streets to find the kids in the know.
They knew as 40 year old designers they were out of the loop and uncool

We got jobs with the iPhone. The Sony Walkman etc

But too many people full of themselves. No one really thinks cybertruck is a great product , never should have seen light of day

Flipside is how lame some companies pushed some stuff- Eg MS with its phone and lame app store , same here for Google - even now the Pixel though good is never pushed, No official release in lots of countries

Suppose people got cheaper VR sets , some jobs, however now more patents to stifle stuff

here's my tip for CrApple or Samsung get some Japanese and some other cultures ( street or otherwise ) to design some metal , or glass cases with colour infusion or inlay built right in -hell could even make them look holographic with 3D layering

GPU manufacturers etc etch /colour their GPUs= I'm sure what's possible is hardly even been touched

 

[RudyBob]

It's really not much more than Zuckerberg. He is concerned with himself first and foremost and owns the majority. When the company decides to hire qualified people to run the day to day as a business FB potential will more than likely be reached

 

[GodisanAtheist]

The best thing about the Meta verse is that Meta burned 45 billion which made its way back into the economy instead of stock buybacks or just plain old hording the wealth.

Wasteful corporate spending is government stimulus without the pesky government part.

Keep it up Meta!

 

[DrSuess]

That is the problem they are pushing their dream on us. I have had zero interest in anything metaverse, it simple now how I am interest in interacting with their platform.

 

[SRB]

It's hard to drive new tech without a "Killer App". VR has a lot of interesting fun things, but has yet to show it in the "must have" way it needs to catch on. I'm still on the fence with AI for this reason as well. While artwork, search summation, and doing kids homework is entertaining as well, I'm not seeing the killer app that will justify what their spending either. At least one that will justify all the expense. Even if it does succeed, what good is it if it costs 4-5 times more for the hardware and energy than the employees they let go of in the first place?

 

[Megalomaniac]

I didn't even know Metaverse was still a thing. I thought all that disappeared with all the money for NFT and Bandmankevo.

 

[daffy duck]

I dont know one person that uses metaverse. not one. and I know alot of people.

Marvel does.

 

[Squid Surprise]

Can someone explain where they spend so much money on in detail? I mean, 45 billion, that's an insane amount of money. And they are not building space rockets. For that money, they could have developed at least 100 AAA games and have a bigger ROI.

I'd assume advertising revenue... there are always companies who want in on it - although I'm guessing less and less as the billions vanish...

Wonder if there's some sort of package where an advertiser pays xx dollars to Facebook and has to spend some of it on the meta part in order to get "normal" ad space...

 

[dm0881]

It's clear that Quest headsets are improving every year, but Meta's attempt to create the metaverse with Horizon Worlds is a failure. There is plenty of research showing the value of VR for things like education and military use, so virtual reality headsets will always be in demand. It can be a lot of fun to use a golf attachment or pickleball adapter and play those games in VR.