Facebook's (FB) bet is not paying off. For the moment. We will probably have to wait a little longer to pass final judgment.
But at a time when all companies, small, medium and multinational, are throwing themselves headlong into the metaverse, this new virtual world that the gurus and big names in tech are selling us, the performance of Facebook's metaverse division should challenge more than one.
The company, which renamed itself Meta in October in order to put many controversies behind it, on Wednesday released for the first time earnings for its metaverse projects.
Reality Labs, which includes augmented- and virtual-reality-related consumer hardware, software and content, is a sink for the company founded and led by Mark Zuckerberg.
This division lost $10.2 billion in 2021, more than double the operating losses recorded in 2020 - $4.62 billion. In 2019, the operating loss was $4.5 billion.
Big Investments Ahead
Investors should expect losses in the coming months to continue to widen as in the fourth quarter the division lost $3.3 billion, 26% more than it did in the quarter ended in September.
"Reality Labs expenses were $4.2 billion, up 48%, driven by employee-related costs, R&D operating expenses and cost of goods sold," Chief Financial Officer David Wehner explained during the fourth-quarter earnings call.
Meta
Despite this performance, the company has not stopped investing in the metaverse.
"Now the last investment priority here is the metaverse. We’re focused on the foundational hardware and software required to build an immersive, embodied internet that enables better digital social experiences than anything that exists today," Zuckerberg said during the earnings call.
Zuckerberg said that Meta later this year would release a high-end virtual-reality headset and would continue to develop Project Nazare, which is Meta's first fully augmented reality glasses.
"I am very excited for the advances that we’re making here," said the billionaire executive.
He doubled down on his bet on the metaverse: "This fully realized vision is still a ways off, and although the direction is clear, our path ahead is not perfectly defined.
"But I'm pleased with the momentum and the progress that we've made so far and I’m confident these are the right investments for us to focus on going forward."
The metaverse is an alternate digital reality that has been receiving a great deal of attention. Humans will interact through three-dimensional avatars that can be controlled via virtual-reality headsets.
15 Years to a Fully Realized Vision
Through the metaverse, users can engage in virtual activities such as gaming, virtual concerts or live sports. The concept got a huge jolt when Facebook changed its name to Meta Platforms in October.
But critics have warned that the metaverse is getting wildly overhyped, and companies are applying the tag to any old project that involves gaming, virtual reality or nonfungible tokens.
Meta, which is looking for new sources of revenue and growth, has already warned that fully realizing its vision and starting to reap the benefits would take at least 15 years.
