In a nutshell: With Facebook changing its corporate name to Meta and so much focus being placed on the future of virtual reality, one might imagine that more people bought VR headsets this year. The worrying reality for the social media giant is that the opposite happened: shipments slumped more than 12% year-over-year in 2022.
Despite facing pushback from consumers and industry figures, Meta continues to double down on its metaverse ambitions. Reality Labs, the division responsible for this unit, has lost around $16 billion since the start of last year, all while Facebook's net income falls as advertisers reel in their spending in these times of economic turmoil.
But could Mark Zuckerberg's obsessive belief in the metaverse be his downfall? Things aren't looking good. A shared virtual reality world requires users to own VR headsets, of course, but their sales have fallen 2% (YoY) in the US this year to $1.1 billion. It's even worse news on the global scale, where shipments are down 12% YoY to 9.6 million, according to data shared with CNBC by research firm NPD Group.
The figures are unlikely to be a concern for Zuckerberg. The CEO says that investment in the metaverse today might not reap any rewards for another decade, at which point the virtual reality platform could potentially start earning hundreds of billions, if not trillions, of dollars.
Few people share Zuck's faith that the VR space will become the new internet, though. One analyst recently predicted that most metaverse business projects will have shuttered by 2025. Elsewhere, a survey of almost 10,000 teens earlier this year showed half were uninterested in the metaverse, and we've even heard of some Meta staff who share this skepticism.
Then there's John Carmack. The legendary programmer, who had been at Facebook/Meta since it acquired Oculus in 2014, expressed disappointment in the metaverse's progress in October. He left the company this month, calling Meta inefficient, constantly self-sabotaging, and ill-prepared for the inevitable competition that will eventually arrive.
But it's not all bad news for Meta. Like so many industries, VR headsets saw a boom in sales last year—revenue in the US doubled from about $530 million in 2020, according to NPD—thanks partially to all the promotions and the pandemic, so a decline isn't totally unexpected. And Meta's Oculus Quest 2 continues to dominate the Steam Survey with a nearly 50% user share. Whether that will placate nervous Meta shareholders is another matter.