Meta’s Reality Labs lost $13.7 billion on VR and AR last year

Mentions of “metaverse” were relatively rare in Meta’s quarterly earnings call this week – we counted just seven mentions compared to 23 for “IA” – but the company’s investment in its vision of a social future connected to virtual reality remains colossal.

Starting in 2021, Meta began splitting its Reality Labs VR and AR division into its own segment for financial reporting purposes. This helps to see just how much Meta is pouring into these areas, and the numbers are staggering.

Meta reported $13.7 billion in operating losses for Reality Labs for 2022, more than the already eye-popping $10.2 billion it gobbled up in the division in 2021. Reality Labs generated $2.16 billion in revenue last year, up from $2.27 billion in 2021.

For scope, recall that Meta bought Oculus — the pioneering VR hardware company that laid the groundwork for its efforts — for $2 billion in 2014. The company’s investment in the region has only ‘rise, the company taking over a number of large software companies. including the creator of Beat Saber and now Within, developer of virtual workout app Supernatural.

Meta did not disclose its workforce for Reality Labs, but the company reportedly had 17,000 employees in the division before layoffs late last year. Staffing and hardware development accounts for the lion’s share of money spent in the region.

Meta CFO Susan Li said the company expects its annual losses for Reality Labs to be even higher in 2023. “…We will continue to invest significantly in this area given the significant opportunities ahead. we see,” Li said, calling his AR, VR, and metaverse software efforts “a long-term investment.”

Meta plans to launch a next-gen consumer headset later in 2023, like a revamped version of its Quest hardware with mixed reality. Apple, one of the only consumer-focused companies ready to compete with Meta in the industry, is expected to launch a new AR/VR headset soon.

During this week’s earnings call, Meta CEO Mark Zuckerberg highlighted the fact that Reality Labs encompasses software related to augmented reality, virtual reality and the metaverse (Horizon Worlds, etc.) in the company. “I think the software and the social platform is maybe the most critical part of what we do, but the software is just a lot less capital intensive to build than the hardware,” Zuckerberg said.

Meta may publicly play down its metaverse efforts to please skeptical investors, but the company seems set to stay the course on virtual reality and augmented reality.

“…None of the signals I’ve seen so far suggest we should change Reality Labs’ long-term strategy,” Zuckerberg said. “We’re constantly adjusting the details of how we run this, so I think we’ll definitely be looking at this as part of the ongoing efficiency work.”