In brief: It seems that no matter how much money Meta's Reality Labs unit loses, Mark Zuckerberg refuses to give up on the company's metaverse ambitions. In its first-quarter earnings report, Meta said Reality Labs, responsible for its metaverse-related tech, recorded a $3.99 billion operating loss. The latest figure means that since 2020, the division has lost a massive $30 billion.
Meta's first quarter was better than expected overall. Sales were up 3% while its $28.65 billion revenue beat analysts' expectations. The company also issued upbeat guidance for the second quarter.
But a less welcome part of the report is related to Meta's Reality Labs division, which once against lost money: $3.99 billion during the three months. That adds to the $14 billion it lost across last year and brings the total loss since Q4 2020 to an eye-watering $30 billion. The only solace for Zuckerberg is that the most recent losses weren't as bad as the $4.3 billion it lost during the previous quarter.
Zuckerberg's blind faith in the metaverse and Reality Labs' work comes as Meta cuts around 21,000 jobs in its so-called "year of efficiency."
There was a time when businesses fell over themselves to invest in the metaverse, but analysts believe most of these projects will close by 2025.
The slumping economy has also played a part in the declining metaverse interest, which wasn't particularly high to begin with. Global shipments of virtual reality headsets fell more than 12% year-over-year in 2022. In a time when people are wary of making expensive, unnecessary purchases, a VR headset isn't high on the list of priorities.
But the biggest problem the metaverse faces is the recent rise of generative AI. Companies are rushing to implement the likes of ChatGPT into their services – even Meta is pushing into this area – putting their resources into artificial intelligence at the expense of metaverse projects. Microsoft's round of 10,000 layoffs saw its industrial metaverse work killed off, and Disney laid off its entire metaverse team as part of cost-cutting plans.
Sensing the lack of positive coverage, Meta's head of global affairs, Nick Clegg, recently held a small virtual press conference within Meta's Horizon Workrooms to remind people that the metaverse will probably be awesome one day. This came a few months after one exec said the metaverse will eventually become as important as smartphones.
Zuckerberg's belief is unwavering. He famously said the metaverse could be earning billions or even trillions of dollars in ten years. If Reality Labs keep racking up losses at its current rate, Zuck's bold prediction will need to be accurate.