Tag Archives: metaverse

Meta’s Money Pit: Metaverse Bet Bleeds Billions

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Source: Statista

Mark Zuckerberg may be certain that the future of his company lies in the metaverse, but to the uninitiated/skeptics among us, it continues to look like a giant money pit. In the first nine months of 2023, the company’s Reality Labs division, i.e. its forays into AR, VR and metaverse-related software, recorded an operating loss of $11.5 billion, which shows the company might be on course to break its own negative record of $13.7 billion in 2022. That’s on top of a $10.2 billion loss in 2021, $6.6 billion in 2020 and $4.5 billion in 2019, bringing the total wager for Zuckerberg’s big bet close to $50 billion over a period of four years.

And that won’t be the end of it either. Despite aggressive cost-cutting measures, Meta still expects “meaningful” Reality Labs operating losses to increase year-over-year in 2024, while at least dropping the word “significantly” compared to its previous outlook on metaverse losses. In the short run, metaverse investments already weigh heavily on the company’s results. In 2022, the company’s operating margin dropped from 40 to 25 percent, as total operating profit declined from $46.8 billion in 2021 to $28.9 billion last year. In fairness, it must be said that the company’s profitable “Family of Apps” (i.e. Facebook, Messenger, Instagram and WhatsApp) also contributed to the decline, as a broader advertising slowdown and the shift to reels have hurt the top and bottom line. That made the $13.7 billion operating loss of the Reality Labs division stand out and sting even more, though, as it couldn’t be glossed over by growth in Meta’s core business.

Discussing the metaverse in a call with investors last year, Zuckerberg defended his long-term vision: “There’s still a long road ahead to build the next computing platform, but we are clearly doing leading work here. This is a massive undertaking and it’s often going to take a few versions of each product before they become mainstream. But I think our work is going to be of historic importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives, as well as a foundation for the long term of our business.”

Infographic: Meta's Money Pit: Metaverse Bet Bleeds Billions | Statista

AR & VR Adoption Is Still in Its Infancy

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Source: Statista

In its quest to making the metaverse the next big thing in tech, Facebook’s parent company Meta unveiled a new virtual and mixed reality headset on Thursday. Starting at $499.99, the Quest 3 is much more affordable than the Quest Pro that was launched last fall, while offering performance that is far superior to its predecessor, the Meta Quest 2.

“Quest 3 is our first mass-market offering to deliver both cutting-edge VR and MR experiences in a single device, setting a new benchmark for future headsets,” Meta said in its announcement, clearly nodding towards Apple, which is expected to unveil its own long-in-the-making VR/AR headset at its Worldwide Developers Conference next week. “Ultimately, our vision is to enable you to move through all realities in a way that’s intuitive and delightful,” Mark Rabkin, vice president of VR at Meta said. “Going beyond the rigid classifications of ‘virtual reality’ and ‘mixed reality’ to deliver truly next-gen experiences that let you effortlessly blend the physical and virtual worlds.” And while Meta has already invested billions in that vision, so far it remains just that: a vision that has yet to come to life.

According to estimates from Statista Market Insights, users of AR and VR devices are still few and far between, with growth projections until 2027 nowhere near the scale that would make mixed reality “the next computing platform”, at least for now. Statista estimates that 98 million people will be using VR hardware this year, while 23 million will be dabbling with more advanced AR technology. By 2027, both AR and VR are expected to have surpassed 100 million users worldwide, but that’s still a longshot from the billions of smartphone users across the planet.

Infographic: AR & VR Adoption Is Still in Its Infancy | Statista

How the Metaverse is Making Money

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Source: Statista

Statista’s Advertising & Media Markets Insights estimates that worldwide metaverse revenue will stand at $490 billion in 2030. This is a comparatively conservative forecast. Other analyst companies assume a market volume of between approximately 750 and 1,700 billion U.S. dollars.

For the Statista outlook, the term metaverse is defined as a virtual world or a collection of virtual worlds that exist in a common digital space and that users can access over the internet. Metaverses include applications of virtual reality, augmented reality and other immersive technologies. The biggest revenue drivers for metaverses are e-commerce and gaming. In addition, metaverses also offer new opportunities for revenue creation in the segments of education, entertainment, health and fitness and even telecommuting.

Metaverse e-commerce sales alone could grow to more than $200 billion by 2030 from currently just around $20 billion. Gaming is expected to grow even more, from just around $10 billion as of now to around $163 billion in 2030. The next biggest applications for metaverse revenue are health & fitness, workplace and education. Statista’s Metaverse Market Report provides more information and data on the subject.

Infographic: How the Metaverse is Making Money | Statista