Mark Zuckerberg and Facebook remain unfazed.
The critics may be everywhere, but they are staying the course.
The future of the giant of social networks passes through the metaverse, they repeated on October 26 as part of the publication of the results of the third quarter.
The metaverse is one of our top "three priorities," Zuckerberg told analysts during the earnings' call.
He acknowledged that "it's a long road ahead" but the metaverse is, according to him, a "new way to blend tech in our lives."
The metaverse is an immersive 3D world in which we will interact via avatars with the help of hardware tech such as virtual reality headsets and goggles for example. In this vision of a parallel virtual world, big tech retains control over the flow of information and our interactions. This is the version of Facebook, known as Meta Platforms (META) since the end of October 2021.
Huge Losses
But there's another version of the metaverse that's decentralized and doesn't require goggles or virtual reality headsets. Users and creators are also owners of their data and masters of their interactions. This version is more open and somewhat free because the internet is powered by the blockchain technology.
For the moment, Zuckerberg's vision is not bearing fruit. It's even worse because the division that oversees the metaverse's activities, Reality Labs, continues to lose a lot of money.
In the third quarter, revenue generated by Reality Labs fell 49% to $285 million compared to the third quarter of 2021, the company said in a press release. The division's net loss increased compared to 2021. This loss amounted to $3.67 billion, up 40% year-over-year. In the first nine months of the year, Reality Labs losses amount to $9.44 billion, up 37% year on year.
Meta is currently developing its metaverse known as Horizon Worlds. To take full advantage of this virtual universe, the company offers headsets. Meta just revealed a new virtual reality headset selling for $1,500. Dubbed the Meta Quest Pro, the headset began to be shipped on Oct. 25.
Zuckerberg also promised new and cheaper headsets.
"I think there’s going to be a consumer device like Quest 2 and Quest 3, the next generation that we’re working on, we’re not releasing it right now," he said in an interview with Ben Thompson’s Statechery newsletter.
He added, "it’s not this year, but there will be a Quest 3 and that’s in the price range of $300, $400, or $500, that zone."
More Losses Ahead
All of this means additional investment as investors and markets have already expressed skepticism about the metaverse.
"Our growth in cost of revenue is expected to accelerate, driven by infrastructure-related expenses and, to a lesser extent, Reality Labs hardware costs driven by the launch of our next generation of our consumer Quest headset later next year," Meta warned on Oct. 26.
Investments that will not, however, pay off in the short and medium term, the company warned, seeming to prepare investors in advance for additional disappointments.
"We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run," Meta said.
For rivals of Meta in the metaverse like The Sandbox, the firm suffers from its vision.
Meta's "vision of a metaverse is very much like this vision from this movie 'Ready Player One' from Steven Spielberg from a few years ago," Mathieu Nouzareth, U.S. chief executive of the Sandbox told TheStreet in an interview.
"And this vision of a metaverse controlled by one company -- this vision of the metaverse where you only experience it with virtual-reality goggles, and basically people live in favelas, and they are poor; they live terribly but [they] live an amazing life in the metaverse -- this vision for me is doomed."
The Sandbox is a platform built on the ethereum blockchain. It enables users to buy, sell, trade and own digital assets in a virtual world. Banking and financial-services giant HSBC, the sports-equipment manufacturer Adidas, the luxury apparel-and-accessories brand Gucci and the consulting firm PWC are among its users.
