- Meta’s Reality Labs unit had an operating loss of $3.99 billion in the first quarter, after losing $13.72 billion in the previous calendar year.
- The division is tasked with developing the virtual reality and augmented reality technologies that make up the metaverse.
- Outside of Reality Labs, Meta is in cost-cutting mode to combat a slowdown in the online ad market.
Meta Platforms Inc. during the virtual Meta Connect event on Tuesday, October 11, 2022 in New York, USA. Avatar of CEO Mark Zuckerberg.
Michael Nagel | Bloomberg | Good pictures
Meta CEO Mark Zuckerberg is increasingly taking losses from his Metaverse investments while shrinking his social media company through cost cuts.
In its first quarter Income statement On Wednesday, Meta said its Reality Labs unit, which develops virtual reality and augmented reality technologies for the future Metaverse, posted an operating loss of $3.99 billion.
The unit generated $339 million in revenue for the quarter, a small amount for a company that generates tens of billions of dollars per quarter in ad sales.
The numbers show a slowdown from last quarter, when Reality Labs lost $4.28 billion on revenue of $727 million.
For all of last year, Reality Labs posted an operating loss of $13.72 billion on sales of $2.16 billion, underscoring that VR and AR technologies have yet to reach the mainstream.
Zuckerberg has designated 2023 as the company’s “year of efficiency” and has implemented major cost-cutting initiatives that include layoffs targeting an expected 21,000 employees.
But even as the company slims down, after changing its name from Facebook to Meta in late 2021, it’s still pouring billions of dollars into Metaverse.
Data provided to CNBC by research firm NPD Group showed sales of VR headsets in the U.S. fell 2% year-over-year through December 2022 as the holiday season failed to spur new purchases.
In March, Meta dropped the price of its Quest 2 VR headset and the higher-end Quest Pro. The Quest 2 is now $70 less than before, selling for $430, while the Quest Pro’s price has been slashed by $500 from its original price to $1,000.
See: Investors should look for Meta’s ad revenue in earnings