Who said that building the metaverse would be easy and cheap? This week, Meta presented the financial results for the first quarter of the year and one of the salient points was that Reality Labs continues to lose money hand over fist. Facebook's virtual reality team had revenue of $695 million, but lost $2.96 billion in the same period.
In this way, the division has accumulated losses of around 20,000 million dollars since 2020. And everything indicates that the story will continue to be the same for quite some time, especially if we take into account that Mark Zuckerberg's own company is confident that there are still missing 5-10 years for the metaverse to realize its potential.
An important point to note is that, as reported by Meta, Reality Labs has increased its revenue compared to the first quarter of last year. As we indicated at the beginning, the division was able to generate 695 million dollars thanks to the increase in sales of virtual reality software and hardware; while in the first three months of 2021 this figure had been $534 million.
However, losses also rose. Just as in Q1 of last year they were for 1,830 million dollars, this year they climbed to $2,960 million; that is to say that the bleeding grew by more than 1,100 million dollars, comparing both periods.
The trend is not new, clearly. Over the last two years, Reality Labs has gradually increased its revenues but has also suffered increasing losses. Something that has already set off alarms among investors who look at the bet on the metaverse with some suspicion.
In 2020, the virtual reality division of Meta (Facebook, at the time) had revenue of $1.1 billion and an operating loss of $6 billion. In 2021, revenues were $2.3 billion and losses climbed to $10.2 billion. And everything suggests that this year the numbers in the red will be even more overwhelming; after all, in the first quarter of 2022 Reality Labs lost more than it generated in the entire last year.
The metaverse already sends chills down the spine of Meta shareholders
Image: Rubén Chicharro.
When Facebook became Meta in October of last year, it began reporting Reality Labs results separately. At that time, Mark Zuckerberg mentioned that an investment of 10,000 million dollars would be allocated to the development of the metaverse. But beyond the initial hype, shareholders are finding it increasingly difficult to keep up with the tremendous spending that the company is making, knowing that its possible fruit will not arrive for another decade.
And the dogged push into the metaverse is causing stress within the company itself. In January it became known that a large number of Meta employees were being practically forced to reapply for positions related to the development of augmented reality and virtual reality solutions; and that 25% of new job searches were related to that category.
Recall that when Meta confirmed that it had lost users for the first time in history, the value of its shares plummeted 24%. This meant a loss of 230,000 million dollars of valuation in one day, something unprecedented in the United States.
Beyond this, the company's overall finances remain healthy. In fact, the firm reported revenue of $27.9 billion in the first quarter of 2022, an increase of 7% compared to the same period in 2021. And this seems to give Mark Zuckerberg free rein to continue spending in the metaverse without worrying. too.
It will be necessary to see if the advances in this matter help to calm the anxiety of the investors. Meta promises to present mixed reality glasses developed by Reality Lab this year; According to Zuckerberg, they will have the potential to replace computers in work environments. In terms of software, the focus is on the web version of Horizon Worlds, today only available on its virtual reality headsets.