Meta Lost $13.7B on Metaverse Initiative in 2022
Mark Zuckerberg’s Metaverse bid proved costly for the company amidst a persistent bear market as Reality Labs lost $13.7 billion in 2022.
According to Meta’s earnings release, the company’s metaverse arm recorded an operating loss of $4.28 billion in the fourth quarter, dragging down its total for the year.
Facebook was rebranded as Meta in the fall of 2021 as Zuckerberg doubled down on efforts to create a digital universe where people can work, shop, play, and learn. However, as Metaverse adoption has slowed down in 2022 due to the turbulent market conditions, the company’s investors called for a curb in spending in the segment.
Burning Billions in Metaverse
In the fourth quarter, Reality Labs generated $727 million, while its revenue for the entirety of the year stood at $2.16 billion, a decline from $2.27 billion in 2021. Despite the losses, the CEO has no plans to change its long-term course in the space. He said,
“Our priorities haven’t changed since last year. The two major technological waves driving our roadmap are AI today and over the longer term the metaverse.”
The company shipped Quest Pro at the end of last year, which is being touted as the first mainstream mixed reality device. Zuckerberg maintained that the focus will be to “deliver better social experiences than what’s possible today on phones.”
Next-generation consumer headset is also expected to hit the market later this year called “Meta Reality,” which the exec believes can potentially “establish the technology as the baseline for all headsets going forward.” AR Glasses will be also shipped around the same time.
Zuckerberg further highlighted that there are more than 200 apps on VR devices that have managed to generate $1 million in revenue.
Losses to Continue?
The losses for Reality Labs are expected to continue. While answering a follow-up question during the earnings call, Meta CFO Susan Li said the company expects the full-year losses for the metaverse division to increase in 2023. According to the exec, the firm plans to invest “meaningfully” in this area, citing significant long-term opportunities.
“It is a long-duration investment, and our investments here are underpinned by the accompanying need to drive overall operating profit growth while we’re making these investments.”
Meanwhile, Meta received approval from Judge Edward Davila in the United States District Court for the Northern District of California to acquire a virtual reality company – Within.
The tech giant had planned to purchase the firm, as well as its fitness app Supernatural, to allegedly acquire a major threat to its metaverse vision. In an attempt to block the move, Federal Trade Commission (FTC) filed a lawsuit against Meta and Zuckerberg.
Despite the federal judge denying the injunction by the FTC, he issued a temporary restraining order to prevent Meta from closing the deal for at least a week.
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