META’s Metaverse is Underperforming. Is This An Opportunity For Other Projects?

Despite opposition from investors and low user engagement, Mark Zuckerberg, CEO of META (formerly Facebook), remains committed to the company’s shift toward the metaverse. Despite this, the virtual reality (VR) and metaverse division, Reality Labs, incurred significant losses in the fourth quarter of 2023, with a loss of $4.3 billion and revenue of $727 million.

In comparison, in 2022, Reality Labs had losses of $13.7 billion on revenues of $2.2 billion, a performance that was worse than in 2021, when the division reported losses of $10.2 billion on revenue of $2.3 billion.

These multi-billion dollar losses demonstrate Meta’s dedication to building the metaverse, a network of immersive VR worlds, even as the company spends more on Reality Labs in the fourth quarter of 2023 than in any other quarter.

Despite criticism from investors and users, Zuckerberg remains optimistic about the future of VR. He pointed out some positive signs to investors, such as the growth of the VR ecosystem, with over 200 apps generating over $1 million in revenue on VR devices, and the creation of VR avatars on WhatsApp by over 100 million people.

While acknowledging that most users are not yet ready for VR headsets, Zuckerberg highlighted that mobile devices may still be the preferred platform for most users to engage with the metaverse. He stated that, as technology advances, most people will experience the metaverse for the first time on their phones and will develop their digital identities across Meta’s apps.

In an effort to cut costs, Meta has also laid off 11,000 employees from various departments in November.