Meta invested colossal sums in the creation of the metaverse. Unfortunately for the company, Reality Labs, the division dedicated to virtual and augmented reality, continues to lose money. The firm announces a loss of 2.81 billion dollars in the space of a single quarter.
Meta’s Reality Labs posts heavy losses
Meta, the parent company of Facebook, WhatsApp, Instagram and Messenger, has just released its financial results for the second quarter of 2022. For the first time in its history, the social media giant recorded a drop in turnover.
This contracted by 1%, to 28.8 billion dollars, compared to the same period last year. For its part, net profit fell 36% to $6.7 billion. Following the announcement, the company’s stock price fell 4%.
Meta suffers in particular from the severe financial losses recorded by Reality Labs, the division devoted to the development of the metaverse. Within a quarter, the division lost $2.81 billion. In total, Reality Labs has already lost $5.77 billion this year. Over the year 2021, Meta had recorded a loss of 10.2 billion dollars.
As a reminder, the division is entirely dedicated to the manufacture of headsets and other accessories intended for mixed reality, which combines virtual and augmented reality. She is notably in charge of the brand’s Quest helmets. It also develops software infrastructures for digital worlds.
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Mark Zuckerberg reassures: Reality Labs will eventually be profitable
Mark Zuckerberg, CEO and founder of Meta, admitted that Reality Labs is not yet profitable. He assures, however, that the technologies related to the metaverse will end up bringing a lot of money to his company. A study by Mckinsey also estimates that the metaverse will represent up to $5 trillion by 2030.
“It is obviously a very expensive undertaking for the next few years. But as the metaverse becomes more important in every part of our way of life… I’m sure we’ll be glad we played a big part in building it. […] I am convinced that the development of these platforms will unlock hundreds of billions of dollars, even trillions of dollars, over time”says Mark Zuckerberg.
To reassure shareholders, Mark Zuckerberg nevertheless agreed to budget cuts these last months. The firm has thus canceled its connected watch project equipped with two cameras. This accessory was to accompany future connected glasses. Additionally, Meta has delayed the release of its first pair of augmented reality glasses to 2024.
Reality Labs’ dire financial results come days after a study found cast doubt on the interests of consumers about the metaverse. According to the study, consumer expectations are out of step with the way the metaverse is designed.
Despite these setbacks, Mark Zuckerberg remains determined to pursue the development of digital worlds in virtual and augmented reality. A winning bet? We will find out in a few years.
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Sources: Meta, Mckinsey
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