Facebook’s parent company, Meta, has seen its Metaverse division drain nearly $50 billion in less than five years, according to a recent Business Insider report.
Reality Labs, the division responsible for Meta’s Metaverse and virtual reality solutions, has been a financial sinkhole since its inception. Starting in 2019 with a loss of around $5 billion, the division’s losses doubled to $10 billion in 2021, reached $14 billion in 2022, and have already surpassed $11 billion in the first nine months of 2023. The cumulative loss now stands at a jaw-dropping $47 billion.
Despite these astronomical figures, Meta remains undeterred. The company stated last week, “We expect Reality Labs’ operating losses to increase significantly in 2024.” This comes as part of Meta’s long-term vision for the Metaverse, a vision that includes significant investments in research and development. The company believes that these investments will yield innovative products and technologies that will be fully realized over the next decade.
Although Meta has made some strides in its Metaverse development. Horizon Worlds, Meta’s virtual world, will soon be accessible not just through VR headsets but also via web browsers and mobile apps. This is a significant development, considering the platform’s previous limitations. Additionally, the Reality Labs division recently launched Meta Quest 3, a mixed-reality headset that marks another step in Meta’s hardware evolution.
However, the Metaverse has struggled with low user engagement, a fact that even Meta’s internal teams acknowledge. Employees within the company are reportedly not frequent users of the virtual world, raising questions about its long-term viability. This lack of user engagement is particularly concerning given the division’s soaring operational costs.
Interestingly, the company reported a 23% increase in sales for the third quarter of 2023, totaling $34.15 billion. Profits surged by 164% to $11.58 billion. These gains were primarily driven by a 31% increase in advertisements across Meta’s various platforms, including Facebook, Instagram, WhatsApp, and Threads. The number of daily users for these services has also increased by 7%, totaling 3.14 billion people.
While Meta’s overall financial performance has been robust, the Reality Labs division remains a significant concern. The company’s total expenses have fallen by 7%, now standing at $20.4 billion, partly due to layoffs in the past year. Yet, the Reality Labs division continues to be a financial burden, raising questions about the feasibility of Meta’s ambitious 10-year plan for the Metaverse.