Meta's Reality Labs has now lost $40 billion, yet the company just had its best quarter...


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What just happened? It's easy to imagine that someone who had lost $40 billion on a business venture would decide it simply wasn't worth it. But not Mark Zuckerberg when it comes to his metaverse plan. Despite the responsible division seeing yet another massive loss in Q2, Meta had its best quarter since 2021, pushing the company's stock up 7% yesterday.

Meta's Reality Labs, the division behind the company's metaverse ambitions, among other things, lost $13.7 billion across the second quarter of 2023, generating just $276 million in revenue. The company said it expects Reality Labs to lose even more in 2023 than it did last year, when it hemorrhaged more than $14 billion. The latest figure means that the division has now lost over $40 billion since 2020.

But Mark Zuckerberg, who has long insisted that the metaverse is a long-term investment that will make billions or trillions by the end of the decade, said Meta remains fully committed to its vision. "I can't guarantee you that I'm gonna be right about this bet. I do think that this is the direction that the world is going in," said the Meta CEO.

There hasn't been much excitement surrounding the metaverse from the beginning, but the rise of generative AI this year has really pushed it into the background. Zuckerberg, of course, isn't losing faith, and believes the likes of smart glasses and a more immersive internet will play a part in the metaverse's rise.

"There are, you know, a billion or 2 billion people who have glasses today. I think in the future, they're all gonna be smart glasses and all the time that we spend on TVs and computers, I think that's gonna get more immersive and look something more like VR in the future," Zuckerberg said. "What we're seeing is richer ways for people to communicate across even the mobile apps that we have going from text to photos to videos, just this continual trend towards being more immersive. All of these trends line up to make me think that this is the right thing. I think we're going to be happy that we did this."

Thankfully for Meta, the Reality Labs' losses didn't gain too much attention as the company beat expectations with an 11% rise in year-on-year revenue to $32 billion – Wall Street had expected $31.1 billion. Earnings per share, meanwhile, were up 21% to $1.98.

Zuckerberg also talked about Meta's focus on AI-powered recommendations, which have helped Reels attract 200 billion views per day across Facebook and Instagram, and the release of the company's Llama 2 large language model.

There was also mention of Threads. The Twitter-like app drew over 100 million users in just five days after launch, and while user engagement is down 70%, Zuckerberg believes it will eventually boast hundreds of millions of users.

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Of course Zuckerberg is going to keep pumping money into this nonsense. He's in too deep and made too many fantastical claims to just back out of it now. Admitting defeat would be far too embarrassing for him. Besides, it's not like he's throwing away his own money anyway.
They can't even get people onboard with AR, but he's still dead-set on VR being anything more than the entertainment/scientific niche it's always been. I don't mind if the company keeps burning billions.
Anyone shiver when they try and imagine what would it be like if Bill Gates partnered up with Zuckerberg? Human life and this planet would be at stake.
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There's definitely more to it than what's being said, what company runs a project at a loss for so long and doesn't get rid of the CEO.
How are they blowing so much money on this? SecondLife has been around for almost 20 years, has better graphics than the Metaverse demos I've seen, and already had better graphics 10 or so years ago than the Metaverse demos I've seen. I mean $14 billion? Really?

I went to see what kind of revenues Linden Labs was making... report from 2011 said the that year and the 3 years up to that point they'd been making $100 million a year revenue with $75 million a year profits. 2022 it was $75 million a year revenue still, and still costs of about $25 million to operate (about 240 employees and some AWS bills since they moved their private data center into "cloud" years ago.) Their initial rounds of funding they got $19 million total (some in 2004 and some in 2006) so it's not like they blew through some huge quantity of cash up front to get it going either.

So, salaries and so on now are higher than they were in 2004 for sure. But close to 1000x the cost? And you now have much faster computers, much better GPUs, and much better internet connections, so you wouldn't have to optimize things as tightly as you would have back then either (I mean hopefully they do but...), and you'd probably have more "off the shelf" code available now than you would then to get things started too. But even if you wrote an engine 100% from scratch, these costs seem high. I don't know what is going on here.
I've said it before, the big problem is content that has to use VR to get the most from it. Games of course, meetings maybe, but basic computer tasks? Why? There's simply no reason to use VR to do a word or excel document.

The bigger problem is ease of use. To get any sort of experience a person needs to wear special headware. And more importantly it needs a good Wi-Fi connection. Easy enough at home, but when you're out and about? Either you rely on guest access which is at best spotty. Or your phone and end up paying 150+ a month in data overages.

Until they solve those problems the metaverse will be a non starter IMHO.