The house that Mark Zuckerberg built is losing mega bucks. The company formerly known as Facebook was rebranded to Meta a couple years ago to reflect Zuckerberg's passion in the metaverse concept and the company's shift in focus to building VR products and experiences, but this shift has been hugely expensive.
CNBC reports that Meta lost a total of $13.7 billion in operating losses in 2022 on its Reality Labs division. Meta reported its earnings yesterday and for the fourth quarter its metaverse-focused division recorded a $4.28 billion operating loss, bringing the total to that staggering figure for the previous year.
The majority of Meta's revenue still depends on online ads and the company is still raking it in from this business, but Zuckerberg has the most highly publicised metaverse ambitions among the tech giants and the founder is making a big bet on the technology.
The metaverse is a shared digital universe where people will interact with each other and Meta is hoping people will shop, play, and work in this virtual reality. But building the VR and AR tech required for the concept to work is costing billions in R&D. Meta debuted its $1,500 Quest Pro VR headset in October, which it is touting as an enterprise device for the workplace and has raised prices on its other headsets. Meanwhile, sales of VR headsets has declined rather than increased in 2022, with research company NPD Group reporting a two percent drop compared to the previous year.
The costs associated with Reality Labs has worried investors with Meta losing nearly two-thirds of its value last year, while the company's ads business faces pressure from competitors such as TikTok and Apple's privacy features, which have dented Meta's ad targeting.
In November, Meta announced that it is laying off more than 11,000 of its workers, reducing its payroll while it still invests heavily in a concept that many investors, and ordinary people, are sceptical of. Last year, Meta said that "Reality Labs operating losses in 2023 will grow significantly year-over-year".
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