Mark Zuckerberg’s Metaverse bid proved costly for the company amid a persistent bear market, as Reality Labs lost $13.7 billion in 2022.
According to Meta’s earnings release, the company’s metaverse arm posted an operating loss of $4.28 billion in the fourth quarter, which shrank the total for the year.
Facebook changed its name to Meta in the fall of 2021 as Zuckerberg doubled down on his efforts to create a digital universe where people can work, shop, play and learn. However, as Metaverse adoption has slowed in 2022 due to turbulent market conditions, the company’s investors called for reduced spending on the segment.
Burning billions in metaverse
In the fourth quarter, Reality Labs generated $727 million, while its full-year revenue was $2.16 billion, down from $2.27 billion in 2021. Despite the losses, the CEO has no plans to change his long-term course in space. He said,
“Our priorities have not changed since last year. The two main technology waves driving our roadmap are AI today and, in the long term, the metaverse.”
The company launched the Quest Pro late last year, which is touted as the first mainstream mixed reality headset. Zuckerberg said the focus will be “delivering better social experiences than what’s possible today on phones.”
Next-generation consumer headsets are also expected to hit the market later this year called “Meta Reality,” which the executive believes can “establish the technology as the baseline for all headsets in the future.” AR glasses will also be shipped at the same time.
Zuckerberg further noted that there are more than 200 applications on virtual reality devices that have managed to generate a million dollars in revenue.
Losses to continue?
Reality Labs’ losses are expected to continue. While answering a follow-up question during the earnings call, Meta’s CFO Susan Li said the company expects full-year losses for the metaverse division to increase in 2023. According to the executive, the firm plans to invest ” significantly” in this area. , citing significant long-term opportunities.
“It’s a long-lasting investment, and our investments here are supported by the accompanying need to drive overall operating profit growth as we make these investments.”
Meanwhile, Meta received approval from Judge Edward Davila in the United States District Court for the Northern District of California to acquire a virtual reality company: Within.
The tech giant had planned to buy the company, as well as its Supernatural fitness app, to allegedly acquire a major threat to its vision of the metaverse. In an attempt to block the move, the Federal Trade Commission (FTC) filed a lawsuit against Meta and Zuckerberg.
Even though the federal judge denied the FTC’s injunction, he issued a temporary restraining order to prevent Meta from closing the deal for at least a week.
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This post Meta lost $13.7 billion on the Metaverse initiative in 2022
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