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  /  Artificial Intelligence   /  Meta’s Metaverse Wing Losses US$3 Billion! But There’s a Sigh of Relief

Meta’s Metaverse Wing Losses US$3 Billion! But There’s a Sigh of Relief

The Metaverse loss is temporary while Meta sets its gear for a long racing track towards success

Meta Platforms (FB) posted a first-quarter loss of US$2.96 billion in its recently created Facebook Reality Labs (FRL) division, which comprises its augmented and virtual reality operations, according to its earnings report. Meta has always been known for it metaverse initiatives, but this loss also indicates a sigh of content from the Meta professionals!

Next Generation of Online Social Experiences

Facebook will begin breaking out results for Facebook Reality Labs (FRL), its augmented/virtual reality division, starting in the fourth quarter, according to the social network company’s third-quarter earnings release. The company has dedicated significant resources toward its augmented and virtual reality products and services, which are an important part of Meta’s efforts to develop the next generation of online social experiences, and allegedly to also improve its falling market position. But currently, its billion-dollar loss sends a relief across Meta’s executives. Facebook actually witnessed its investment in Reality Labs reducing its overall operating profit by about US$10 billion in 2021. 

The CEO Puts His Trust in Metaverse

CEO Mark Zuckerberg said on the company’s earnings call that the investment won’t be profitable any time in the near future; however, he believes that moving into the metaverse holds great potential for the company by unlocking a “massively larger creative economy” Zuckerberg has previously discussed repositioning Facebook as a player in the metaverse, or the immersive digital world created by the combination of virtual reality, augmented reality and the internet. There have been recent reports the company plans to rebrand and potentially even rename itself accordingly.

The New Reporting Structure by Facebook

Starting in the fourth quarter, Facebook said it will have a new reporting structure with two reportable segments: Family of Apps (FoA), which includes Facebook, Instagram, Messenger, WhatsApp, and other services, and also Facebook Reality Labs (FRL), which includes augmented and virtual reality related consumer hardware software and content. Overall for the third quarter, Facebook reported adjusted earnings per share of US$3.22 versus the US$3.19 expected by analysts, according to FactSet, and revenue of US$29.01 billion, versus US$29.49 billion expected. Shares of Facebook rose about 1.6% in postmarket trading to US$338.80 FRL generating revenue of US$695 million in the first quarter, a small fraction of the US$27.2 billion generated in the quarter from Meta’s family of apps, which include Facebook, Instagram, and WhatsApp. Analysts were expecting a revenue of US$683 million for the “metaverse” division.

Meta CEO Mark Zuckerberg said the company’s metaverse arm is on a long-term timeline, currently “laying the groundwork for a very successful 2030s,” according to the earnings call. Zuckerberg reiterated that the web version of the company’s Horizon Worlds metaverse platform is slated for release this year, to be followed by its augmented and virtual reality versions.