Meta Platforms Inc.’s META Reality Labs has reported a $3.7 billion operating loss in its latest financial report, primarily attributed to decreased Quest 2 sales, shedding light on the financial challenges faced by Mark Zuckerberg’s company in its metaverse endeavors.
What Happened: Reality Labs, the tech unit dedicated to developing metaverse-related technologies within Zuckerberg’s Meta, continues to face substantial setbacks.
On Wednesday, during the company’s third-quarter earnings call, Meta’s chief financial officer, Susan Li, said that this quarter, the unit witnessed a staggering $3.7 billion operating loss, which largely stems from a decline in its VR headset, Quest 2 sales.
“Within our Reality Labs segment, Q3 revenue was $210 million, down 26% due primarily to lower Quest 2 sales. Reality Labs expenses were $4.0 billion, flat year-over-year as higher headcount-related expenses were offset by lower non-headcount related operating expenses. Reality Labs operating loss was $3.7 billion,” she said.
The Meta CFO cited their ongoing product development efforts in the augmented and virtual reality space as a major factor contributing to the operating losses. Their strategy includes investments to scale their ecosystem and build a future for online interactions.
Li also said, “For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.”
Why It’s Important: Previously, it was reported that Meta experienced a cumulative loss exceeding $13 billion throughout last year due to its unsuccessful attempts to establish a widely adopted metaverse.
In the last months of 2022, Reality Labs generated $727 million, a decrease of 17% compared to its revenue in the same period of 2021.
Despite the current financial challenges, the Zuckerberg-led company remains committed to its metaverse vision. Last month, the company launched its latest headset, the Quest 3, which was marketed as a technically superior alternative to the Quest 2, focusing on providing a mixed reality experience.
Earlier, Meta CEO said that the company intends to make VR more affordable compared to competitors, such as Apple’s first-generation mixed reality headset, Vision Pro, which will be available for sale in early 2024 at a hefty price tag of $3,499.
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