Meta, the social media company, has reported that its metaverse division, the Reality Labs Unit, is shedding lots of money. In its recent earnings call, the company informed that, while the Reality Labs unit managed to pull more than $400 million in sales, its losses reached $2.8 billion, mainly due to research and development costs associated with metaverse and VR products.
Meta’s metaverse push causes it to lose funds
Meta, one of the first companies to announce a social media pivot to the metaverse, is struggling to make a profit from its new direction. In its latest earnings call, which reports on the company’s economic performance during the second quarter, the company announced that its metaverse division, the Reality Labs unit, lost more than $2.8 billion in the last quarter. the mentioned period, even when it manages to register more than 400 million dollars in sales.
Reality Labs is in charge of the metaverse strategy of the company, including the development of virtual reality and augmented reality products and the research needed to build them. The monetization of Meta’s metaverse initiatives is still a work in progress, with its flagship VR app, Horizon Worlds, opening its monetization options to users, with the company keeping up to 50% of each sale.
Negative predictions
Meta’s outlook for the third quarter of 2022 is also negative. The company attributed this prediction to:
continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty.
Mark Zuckerberg, CEO of Meta, also hinted at the possibility of layoffs over the next year, saying “this is a time that demands more intensity and I expect us to do more with fewer resources. The company said it had increased its workforce by 32% since last year, with its workforce reaching 83,553.
In July, Zuckerberg made remarks on slowing the hiring strategy of the company and raising performance standards for current Meta employees.
On the metaverse side, the company also forecast that Reality Labs will continue to lose money in the next quarter. However, Zuckerberg called this metaverse pivot a group of long-term investments because he believes the metaverse will evolve over time to host billions of users who will all transact in the metaverse, with each of those transactions being monetized. by the company.
