- Mark Zuckerberg’s bet on the metaverse cost his company billions of dollars.
- Meta’s Horizon Worlds and VR projects failed to impress investors and users.
- Zuckerberg remains optimistic about the growth of VR and the metaverse ecosystem. However, he acknowledges that mobile platforms will likely remain dominant for some time.
Despite protests from investors and a lack of user adoption, Zuckerberg remains steadfast in his metaverse pivot.
Meta (formerly Facebook) reported billions in losses in its virtual reality (VR) and metaverse division Reality Labs. Reality Labs lost $4.3 billion in the fourth quarter of 2023 while bringing in revenues of $727 million.
In 2022, Reality Labs had $13.7 billion in losses on revenues of $2.2 billion. On balance, Meta’s VR division performed worse than in 2021. The division then reported $10.2 billion in losses on $2.3 billion of revenue.
The multi-billion dollar losses are a sign that Meta is sticking to its commitment to build the metaverse, a network of immersive virtual reality worlds. The company spent more on Reality Labs in Q4 of 2023 than in any other quarter.
Meta continues to double down on this investment, despite investors’ and users’ poor reception. Meta’s virtual world, Horizon Worlds, was a target of ridicule throughout 2022. For instance, critics took shots at its bad graphics, lack of users, and exciting activities.
Zuckerberg Remains Optimistic About the Metaverse
Despite slow adoption, Meta’s CEO, Mark Zuckerberg, remains optimistic about the future of VR. In an attempt to find a silver lining, Zuckerberg highlighted some positive signs to investors.
“Beyond MR, the broader VR ecosystem continues growing. There are now over 200 apps on our VR devices that have made more than $1 million in revenue,” he said.
Zuckerberg also boasted that more than 100 million people created their VR avatars in WhatsApp since their launch in the last quarter.
However, Zuckerberg did acknowledge that most users have yet to be ready to get a VR headset. Instead, he highlighted that mobile devices may still be the favorite platform for most users to interact with the metaverse.
“Because even though most of our Reality Labs investment is going towards future computing platforms — glasses, headsets, and the software to run them — as the technology develops, most people are going to experience the metaverse for the first time on phones and start building up their digital identities across our apps,” he added.
Meta is cutting staff in other segments of its business. In November, the company laid off 11,000 employees from various departments.
On the Flipside
- The lack of users in Meta’s Horizon Worlds could indicate that current conditions favor multiplatform metaverses. For instance, the popular sandbox game Roblox supports mobile, desktop, and VR devices.
Why You Should Care
Meta’s multi-billion dollar investments in the metaverse show the potential risk of investing in a nascent ecosystem. As the ecosystem matures, it will likely bring more opportunities for investors.