If there's one thing Mark Zuckerberg's critics admire about him, it's that he's tenacious.
For almost a year now the CEO of Meta Platforms (META), parent company of Facebook, Instagram and WhatsApp, has been telling the world that the future of his social media empire is being played out in a virtual world in which we will immerse ourselves using reality headsets and other technologies to interact through avatars.
This world is called the metaverse. To convince us of the seriousness of this huge bet, Zuckerberg renamed Facebook Meta Platforms, a way of saying that his company is the center of this world or these emerging technologies.
Besides, Meta now writes this in the "About Meta" section: "Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology."
Huge Losses
The problem for Zuckerberg is that after the metaverse madness at the end of 2021 and the beginning of 2022, the momentum has died down. You don't have to look any further than Meta's performance to see that the Metaverse remains a huge sink of losses and expenses for the California-based Menlo-Park giant for now.
Take the latest quarterly results published on July 27. Reality Labs, the division comprising all metaverse-related projects, posted revenues of just $452 million, or just 1.56% of Meta's total revenue of $28.82 billion, according to a press release.
It's even more painful when you look at the bottom line. We realize that the losses of Reality Labs are only growing. In the second quarter ended June 30, the division recorded an operating loss of $2.81 billion compared to a loss of $2.43 billion in the second quarter of 2021. In the first half, losses amounted to $5.8 billion compared to $4.3 billion in the first half of 2021.
"We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue," Chief Financial Officer David Wehner warned.
This once again negative prediction would temper the optimism of more than one. Guess it has no effect on Zuckerberg.
"The metaverse is a massive opportunity for a number of reasons," the billionaire told analysts during the second quarter earnings' call on July 27. "Most importantly, it enables experiences where you feel a realistic sense of presence with other people, no matter where they are, and whether you're playing games or working for hours at a time. Or if you're just jumping in for just a minute at a time to say hi to a friend or collaborate on a project quickly."
"I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars if not trillions over time. Because this is obviously a very expensive undertaking over the next several years. But as the metaverse becomes more important in every part of how we live from our social platforms and entertainment to work and education and commerce, I'm confident that we're going to be glad to play the role in building [it]."
A New and High End VR Headset by December
The chief executive officer recalled that the metaverse was one of Meta's priorities, along with artificial intelligence, which increasingly allows it to offer unwanted advertising content to users of its platforms.
The manufacturer of the Meta Quest headset is working on its newest VR headset, which is specifically designed for work. Named Project Cambria, it was announced in October 2021 and promises to mirror users' facial expressions in VR for a more realistic metaverse experience.
"Later this year we'll release project Cambria, and the experience here is getting pretty awesome. It'll be a high end device focused on professional users and work with high resolution color mixed reality. I'm really looking forward to getting this one out. This is just one milestone in the long term path but I think people are going to be pretty blown away by this," Zuckerberg also told analysts.
The Meta Quest headset sold 8.7 million units in 2021, indicating that it has an audience for VR beyond the videogame-centric base for which it was originally created.
Meta also continues to develop Horizon Worlds, its social metaverse platform for Quest VR headsets. The company is planning to take an overall cut of up to 47.5% on the sale of digital assets on Horizon Worlds by creators.
Of this 47.5% charge, almost two-thirds (30%) of it is a hardware-platform fee for sales made through Meta Quest Store, where it sells apps and games meant for its VR headsets, and a bit more than a third (17.5%) cut is its Horizon platform fee.
"We're gonna be launching a web version of horizon that will be accessible on all platforms, which dramatically increase the number of people who can use horizon," Zuckerberg said excitedly.
It's hard to tell if his enthusiasm is poker face or if he really believes the metaverse is the next big thing.
