Meta is seemingly losing a lot of money due to its metaverse business. The company reported its quarterly earnings, in which Meta’s Reality Labs operated at quite a loss. The division saw a loss of $2.96 billion in Q1 2022, up from $1.8 billion last year.
“It’s not going to be until those products really hit the market and scale in a meaningful way, and this market ends up being big, that this will be a big revenue or profit contributor to the business. This is laying the groundwork for what I expect to be a very exciting 2030.”Mark Zuckerberg
Meta’s Metaverse (AR/VR) division: Reality Labs
Meta’s Reality Labs is responsible for Portal devices, Quest VR devices, Ray-Ban AR glasses, and future AR and VR devices. The division brought $695 million in revenue in Q1 2022, up from $534 million last year. However, the cost of this division was also $3.7 billion in Q1 2022, up from $2.4 billion in Q1 2021.
Last year alone, Meta lost over $10 billion from its metaverse (AR/VR) division. The company’s CFO clarified that the Q1 cost includes employee-related costs, R&D operating expenses, and the cost of goods sold. This loss is not surprising if you consider how the Meta loses money for each Quest 2 VR headset sold.
This loss is somewhat expected, as Mark Zuckerberg warned investors last year that investments in AR & VR would reduce Meta’s overall profit in 2021. He also said, “I expect this investment to grow even further for each of the next several years.”
Investors and Meta employees are doubting the direction the company is heading in. It was only recently that the company opened a Meta storefront for its VR and AR devices. However, only time will tell if Mark Zuckerberg’s obsession with VR, AR, and the metaverse will pay off in the end.