Zuckerberg's metaverse dream is collapsing after billions in losses

[midian182]

Bottom line: After burning tens of billions and stubbornly insisting the metaverse would eventually justify the cost, Mark Zuckerberg appears to be backing away from his most ambitious project. Once its defining obsession, it appears that Meta's boss has finally decided to cut his losses: the metaverse could be on the way out.

Reality Labs encompasses several areas of Meta's VR/AR business, but Bloomberg writes that two of them will be hit hardest: Horizon Worlds and virtual reality. Zuckerberg is planning to slash Reality Labs' budget by 30%, with the cuts coming as early as January 2026.

A Meta spokesperson confirmed some elements of the report, stating that "we are shifting some of our investment" from the metaverse group toward AI glasses and wearables as it looks to capitalize on the "momentum" in the segment.

Meta has placed a lot of effort into its smart glasses products recently. In September, the company unveiled the second-generation Ray-Ban Meta, the Oakley Meta Vanguard, and the Meta Ray-Ban Display.

Meta's stock was up 3.4% on the back of the news, and it's easy to understand why. Since Meta started reporting Reality Labs' revenue in Q4 2020, the division has reported total operating losses of around $70-75 billion (not million).

Zuckerberg has had an unwavering faith in the concept. His belief that an immersive AR/VR metaverse would one day be as popular as smartphones resulted in Facebook changing its corporate name to Meta in 2021.

The CEO repeatedly said that the industry will be worth billions or even trillions of dollars after 2030 – Meta even commissioned a report in 2023 that claimed the metaverse could contribute $760 billion to the US GDP by 2035.

But then the generative AI revolution took off. The tech industry found a new obsession as the idea of everyone interacting in a virtual world became less popular.

Now, of course, Meta is pouring billions into AI. For 2025, the company raised its capital-expenditure forecast to about $70-72 billion, a figure that links heavily to AI infrastructure such as data centers, compute hardware, cloud, and related investments.

Meta (and most of the tech industry) will no doubt hope that this time, the huge spending does pay off. But Zuckerberg doesn't seem worried either way. "If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously," he said in September. "But what I'd say is I actually think the risk is higher on the other side."

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Zuckerberg's metaverse dream is collapsing after billions in losses

 

[Alfonso Maruccia]

"Oh no. Anyway..."

 

[ScottSoapbox]

He's not wrong. Using your current excess billions to keep that gravy train running in the future is smart -even if you guess wrong a few times as long as you eventually get in on the next thing that will erase Facebook's relevance.

 

[Axeia]

I did wonder how long they could keep sinking money into two black holes simultaneously.

Meta's AI spendings are absolutely insane btw. Reportedly they're the biggest customer after Microsoft when it comes NVIDIA H100 GPUs. At 350.000 of them that's 350.000 * $30.000 = $10.5 Billion (now add the electricity and cooling costs etc - insanity)
I can't say I've seen many promising things stem from that, heck - what has Meta even released that's AI related. Some celebrity AI bots? From what I understand those are less popular than character.ai (by Google...).

Must be nice to be Zuckerberg, people just throw money at you that you can sink into fiascos. Levels of inefficient spending only rivaled by governments.

 

[James321]

Good, good...

Next : AI

 

[NumberNine]

TechSpot has been dragging lately. Crucial is de-branded and we don't hear about it until the next day and today Netflix is buying WB/HBO and the comments section is faster than the writers, even when assisted by LLMs.

 

[DrSuess]

I don't know a single person that wanted to be a part of the Metaverse.

 

[ScottSoapbox]

Must be nice to be Zuckerberg, people just throw money at you that you can sink into fiascos. Levels of inefficient spending only rivaled by governments.

People throw money at Zuck because FB's data (that people give him willingly) allows for much more targeted ads that results in much better sales per ad.

Both sides win in the exchange, but because FB and Google control >95% of ads on the internet that becomes a massive revenue stream. A revenue stream worth protecting against any future changes.

 

[wiyosaya]

Sounds like Zucky. From one nuclear accident to another.

 

[Neatfeatguy]

I think Mark saw the movie Ready Player One and was like - I want to make that and we can with billions of dollars and people will do anything or pay anything to use it!

Rich people and their money.....

 

[Theinsanegamer]

He's not wrong. Using your current excess billions to keep that gravy train running in the future is smart -even if you guess wrong a few times as long as you eventually get in on the next thing that will erase Facebook's relevance.

It's not smart to invest hundreds of billions into a failed Second Life clone. People have made far more interesting games in VR with shoestring budgets by comparison.

I've seen unreal engine asset flips that look better. WTF is the money going?

 

[seeprime]

Zuckerberg is the past, whether he knows it or not. Facebook will keep him rich for as long as his algorithms can milk money from advertising.

 

[nnguy2]

If Zuckerberg fired himself 5 years ago meta would have save close to $100bil?

 

[bviktor]

Oof. Right now that I finally bought a Quest 3, “great”.

In any case, good stuff (with some extra accessories), and Synth Riders still is the dancing game king.

 

[GrayDragon]

I could see using VR in real life as a translation tool for people with languages other than English, just put the VR glasses on to access AI interpreting service, similarly I could see using this for deaf and hard of hearing people to either read text of someone talking to them, or an ASL interpreter in a bubble similar to some news services, and finally VR seems to be OK in gaming, but not really used by most programmers. But a whole VR world? That's pretty hard to work with I think. You need a safe place to walk around, don't you? Or are you just going to sit and do all the walking in your head? Ack. So inane to me. There is one other use of VR I never saw implemented and that's for virtual meetings for businesses with multiple locations. Just put in a standard size and layout meeting room in each location and the whole safe to walk around aspect might be minimized. It would be like Zoom Plus.

 

[airbornex]

Reality Labs losing $70B+ feels like the world’s most expensive side quest. At least with AI they can pivot to something people actually use… like asking ChatGPT whether their sourdough starter is dying.

 

[OortCloud]

I didn't think it was possible but Zuck's metaverse avatar looks like even more of a tool than its real-life counterpart.

 

[Watzupken]

I am not sure if moving from one bad investment to the next is going to help Meta. AI is the latest hype that requires massive resources but does not have a sustainable inflow/ revenue. If anything, it helps with share prices that benefits the top of the house, not for the long term growth of the firm.

 

[Sayak Biswas]

I would venture so far as to say that it was the mere involvement of Facebook that killed the Metaverse and took the wind out of VR's sails. Conversely, if FB did not get involved with VR at all, VR adoption would be much higher. Just the mere mention of Facebook leaves such a bad taste, that it turned many people off trying VR. I really wanted a occulus rift. But once FB got involved, I avoided it like a plague. Eventually settled on a HP reverb gen 2. Valve is doing the right thing with VR.

 

[ZedRM]

Meta, Facebook and it's associated companies need to go away.

 

[OortCloud]

I would venture so far as to say that it was the mere involvement of Facebook that killed the Metaverse and took the wind out of VR's sails. Conversely, if FB did not get involved with VR at all, VR adoption would be much higher. Just the mere mention of Facebook leaves such a bad taste, that it turned many people off trying VR. I really wanted a occulus rift. But once FB got involved, I avoided it like a plague. Eventually settled on a HP reverb gen 2. Valve is doing the right thing with VR.

I know what you mean. Much like the 'Elon Effect' at Tesla.