Million Dollar Boondoggle: Could the Metaverse Be a Waste of Money?

Last Updated: 8. November 2023By

In the first nine months of 2023, Metas Reality Labs, the business unit for Augmented and Virtual Reality, recorded an operating loss of 11.5 billion US dollars. In recent years, the Metaverse project has been a billion dollar drain on the company, as the following Statista chart shows.

2023 is well on track for Meta to break its own negative record of 13.7 billion US dollars in 2022. In total, Zuckerberg’s bet on virtual reality has cost almost 50 billion US dollars within the past four years.

Reality Labs will also need large investments in the coming years. Despite aggressive cost-cutting measures, Meta still expects operating losses from Reality Labs to increase in 2024 compared to the previous year. Short-term, Metaverse investments are already heavily impacting the company’s results. In 2022, the company’s operating margin fell from 40 to 25 percent, while total operating profit dropped from 46.8 billion dollars in 2021 to 28.9 billion dollars last year.

However, this is not only due to Reality Labs. Less advertising on Metas apps as well as a greater focus on „Reels“ have also affected the result. Nevertheless, Mark Zuckerberg continues to hold on to his vision. The CEO himself assigns „historic significance“ to Meta’s work in the field of AR and VR.

My Metaverse conclusion: The dead lives longer! It has been very quiet around the Metaverse in recent months. I have heard media reports that have already written about the „end of a dream“ or even the alleged „death“ of the Metaverse. It is beyond doubt that the deep „crypto winter“ has also led to a great disillusionment around the virtual spaces. Nevertheless, the same applies to the Metaverse and the associated linking of the real world with digital worlds: the dead live longer!

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