While Meta raked in billions from its core advertising business last quarter, one division continues to be a relentless money pit: Reality Labs.
Meta is doing well, even very well, but that’s not the case for all parts of the company. Reality Labs, the company’s virtual and augmented reality arm spearheading its highly ambitious metaverse efforts, is much less profitable than other divisions.
New financial disclosures reveal that Meta has lost approximately $1 billion per month in its AR/VR business since mid-2022. In its Q1 2024 earnings report released this week, Meta revealed that it has lost no less than $3.85 billion in the first three months of the year alone. In total, the division’s net losses now exceed $45 billion since Meta began separating them from its general finances in 2020. Reality Labs hasn’t made a profit in a single quarter for the tech giant.
The Metaverse is a real money pit for Meta
Despite these astronomical recurring losses, Meta remains undeterred by his optimistic outlook on virtual reality and the metaverse. The company stated in its press release that it “continues to expect operating losses to increase significantly year over year” in Reality Labs as investments increase.
Zuckerberg and his company clearly believe that the path to monetization of these next-generation computing platforms involves relentless investment and the creation of a leading ecosystem, regardless of the importance of the initial costs. The calculation is guided by a long-term vision in which future ubiquity offsets today’s multibillion-dollar spending.
However, the metaverse hasn’t been an easy sell so far, for both consumers and businesses. Sales of virtual reality headsets have stagnated, and even Apple’s mixed reality headset appears to be running out of steam. As a result, many are wondering whether Meta is simply financing an unprofitable passion project detached from market realities. Zuckerberg, for his part, remained inflexible in the face of growing losses and skepticism. And you, do you think that the metaverse is really the future of technology?