A metaverse filled with digital worlds and avatars might be coming someday, but it won’t be cheap. Facebook parent company Meta has released its financial results for the first quarter of 2022 and it shows that this year alone, the company’s virtual reality-focused department has lost $2.96 billion so far. This continues a trend of operating heavily in the red, with the same division having lost nearly $20 billion since 2020.
As reported by VentureBeat, Meta released its 2022 Q1 financial results yesterday and revealed that Reality Labs, the company’s virtual reality-focused group, had lost just around $3 billion. During that same time period, the division brought in just $695 million in revenue. Now, in most cases I wouldn’t be saying “just” before a number as disgustingly huge as 695 million.
However, that’s a drop in the bucket compared to what Mark Zuckerberg’s company has spent on VR. In 2021 alone, Meta lost $10 billion via its VR business. In that same year, it brought in revenue of $2.3 billion, less than what it’s lost in just the first quarter of this year. And remember, in 2020 Meta’s VR division burned an additional $6 billion.
Today’s new numbers aren’t shocking. It ain’t cheap to create virtual reality headsets or software. Meta and Facebook are continuing to spend a lot of money on advertising, researching, building, and developing virtual reality headsets, apps, and social spaces. It also has hired more folks to work in its VR division, hitting a reported 17,000 employees as of 2022. So it makes sense that paying that many people to build something as expensive as our collective virtual reality future is going to cost some money.
And the company’s flagship headset, the Meta Quest 2 (formerly know as the Oculus Quest 2) is selling great. But these new numbers make it clear that virtual reality and the metaverse continue to be a costly venture for Meta.
It should be noted that Meta will be fine, even as it burns money on building the VR-powered metaverse of tomorrow. The company’s overall Q1 revenue for 2022 exceeded $25 billion. And last year it brought in a staggering $117 billion in total revenue across all divisions and apps. So Zuck can continue to spend all this money to build his own metaverse. (Hopefully it gets better than the mostly boring and sterile world that currently exists…)
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Of course, the question remains: Does VR ever escape from being a niche interest and niche market that takes billions of dollars to support year after year? Sure, some companies like Valve and Sony have continued to show interest, investing in and building out their own VR experiences and devices. But it seems like the future of VR is as a tool to access the metaverse, whatever that (maybe) ends up becoming.
Now I wonder, how many years and billions of dollars will it take for us to get to the metaverse, and do most people even want it? Zuckerberg and Meta are betting billions that the answer to that question is yes. But I’m not so sure about that.
Correction 04/28/2022 9:05 pm ET: Revised several statements to clarify that they refer to the company’s revenue, rather than profits.