Meta Platforms Inc., the company behind the metaverse concept, is facing significant financial setbacks. In its third-quarter earnings report, Meta revealed that its Reality Labs division, responsible for developing metaverse-related technologies, recorded an operating loss of $3.7 billion. This highlights the steep cost of Meta’s foray into virtual reality (VR) and augmented reality (AR), with the metaverse taking a backseat in recent discussions.
The performance of the Reality Labs division fell far below expectations. Analysts had projected sales of around $299.3 million, but the division only reported $210 million in revenue. The operating loss of $3.7 billion exceeded the anticipated loss of $3.9 billion. Despite these setbacks, Meta remains steadfast in its commitment to realizing the metaverse. One recent manifestation of this commitment is the introduction of the Quest 3 VR headset, which offers a more immersive mixed-reality experience.
The Quest 3, priced at $499, has sparked some debate due to its higher price compared to the Quest 2. However, it is still a more budget-friendly option compared to the high-end Quest Pro VR headset, which costs $3,499. Meta positions its Quest line of headsets as a cost-effective choice for consumers interested in VR, especially when compared to Apple’s upcoming Vision Pro mixed reality headset, expected to debut next year at $3,499.
Meta also offers a subscription-based model with the Meta Quest+ VR subscription service, priced at $7.99 per month. This service provides users with access to two new monthly games compatible with the Quest 2, Quest Pro, and Quest 3 VR headsets.
Despite the significant losses in the Reality Labs division, Meta’s overall financial performance in the third quarter showed resilience. Total sales for the quarter reached $34.2 billion, surpassing the average analyst estimate of $33.5 billion. However, Meta’s Chief Financial Officer, Susan Li, cautioned that the company remains susceptible to macroeconomic fluctuations, casting uncertainty on its revenue outlook for 2024 and its financial future.
To address financial pressures, Meta took steps earlier in the year to reduce its workforce and streamline its operations. These efforts aimed to strengthen its advertising capabilities and leverage artificial intelligence to enhance its algorithms. However, the metaverse has seen a diminishing presence in recent discussions, particularly due to skepticism from the investor community.
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