Meta has lost over $26 billion in little over 2 years on its expensive metaverse ambitions.
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Meta’s latest Q4 results give us a bigger picture on how much the company is spending (and losing) on the metaverse. From Holiday 2020 to full-year 2022, Meta’s Reality Labs division which oversees its VR, AR, and metaverse platform has operated at a loss of $26.01 billion. Reality Labs has operated at a multi-billion dollar loss for many quarters in a row and this aggressive investment isn’t expected to slow down.
In an earnings call, Meta CEO Mark Zuckerberg spoke a broader spectrum for what the metaverse entails. Zuckerberg didn’t discuss salient details and kept specifics somewhat thin while discussing plans for a new next-gen Meta Reality headset that will tie into its ecosystem of games and content, and talked up how VR and AR may eventually become more social than the current smartphone messaging apps.
4The last area that I want to talk about is the metaverse. We shipped Quest Pro at the end of last year, and I’m really proud of it. It’s the first mainstream mixed reality device, and we’re setting the standard for the industry with our Meta Reality system.
As always, the reason why we’re focused on building these platforms is to deliver better social experiences than what’s possible today on phones. The value of MR is that you can experience the immersion and presence of VR while still being grounded in the physical world around you.
We’re already seeing developers build out some impressive new experiences like Nanome for 3D modeling molecules and drug development, Arkio for architects and designers to create interiors, and of course a lot of great games.
The MR ecosystem is relatively new, but I think it’s going to grow a lot in the next few years. Later this year, we’re going to launch our next generation consumer headset, which will feature Meta Reality as well, and I expect that this is going to establish this technology as the baseline for all headsets going forward, and eventually of course for AR glasses as well.
4One interesting tidbit that Zuckerberg revealed was that metaverse software is a lot less expensive than hardware development. This makes sense considering the relatively lower-scale projects and content required for MR-style gaming experiences as opposed to the intensive and expensive production and research/development costs of hardware.
“And then the smallest by kind of budget size today is the Metaverse software program. And that’s — it doesn’t reflect the importance of it. I think the software and social platform might be the most critical part of what we’re doing, but software is just a lot less capital intensive to build than the hardware. So it’s the smallest part of the program. And within each of those areas, there are a lot of different things that we’re doing.
Meta is attempting to counter this operating loss with its new “year of efficiency” program that will lay off thousands of employees and restructure key divisions and spending points.
Meta spent $4.198 billion on restructuring throughout 2022, including $1.882 billion on consolidating its facilities, $1.341 billion on data center operations and costs, and $975 million on severance and personnel costs.
Meta plans to lay off 11,000 people across its Family of Apps and Reality Labs divisions.
“Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said.