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Despite uptick in revenue, Meta's Reality Labs posts $2.8 billion loss

Revenue for the VR and metaverse-minded Reality Labs division rose by around $150 million from where it was a year ago, but Meta's heavy investments in its dream of a virtual future pull the division's income into the red.

Alissa McAloon, Publisher

July 27, 2022

3 Min Read

Meta's financial results for the quarter ending June 30 show that the company is indeed still raking in the billions. But further down the balance sheet, below updates on Facebook and Instagram, the report grants a brief look at how the company's VR and metaverse-minded Reality Labs division is faring, and a glimpse at exactly how much Meta is betting on that metaverse dream.

Meta's Reality Labs division houses the VR brand sometimes, and mostly formerly nowdays, known as Oculus, and acquired VR developers like Beat Saber developer Beat Games. The department chiefly deals with AR and VR tech, as well as the games and software developed for those devices. Meta has been investing heavily in the idea of virtual worlds and a metaverse, and those investments aren't cheap.

For just the quarter ending June 30, 2022, Meta reported a loss of $2.8 billion across only the Reality Labs segment, up just slightly from the $2.4 billion loss reported for the same period back in 2021. Extend that out the cover the first half of the financial year and that loss grows to approximately $5.77 billion for the six-month period ending June 30, up quite a bit from the around $4.26 billion reported the year prior.

The loss isn't to say that Meta's virtual reality plans are failing to take hold. Looking at revenue, Reality Labs brought in $452 million for the quarter (up year-over-year from $305 million) and around $1.15 billion for the first half of the year (up year-over-year from $839 million). And that slight uptick comes during a period where Meta is seemingly selling its Meta Quest VR headsets at a painful loss; the company has just this week announced plans to raise the price on the VR headset by $100.

Investments for the virtual future

Last quarter, Meta CEO Mark Zuckerberg started off the Q1 investor's call with somewhat of a disclaimer on Reality Labs' financial standing, cautioning investors that it'll be expensive in the short term to fund the metaverse, but that it'll pay off in the longer term and that, in the shorter term, other products like Facebook would rise to help make up for Reality Labs operating income.

From those earlier remarks: "In Reality Labs, we're making large investments to deliver the next platform that I believe will be incredibly important both for our mission and business -- comparable in value to the leading mobile platforms today,"

"I recognize that it's expensive to build this -- it's something that's never been built before and it's a new paradigm for computing and social connection," Zuckerberg explained earlier this year. "So over the next several years our goal from a financial perspective is to generate sufficient operating income growth from Family of Apps to fund the growth of investment in Reality Labs while still growing our overall profitability."

However, that profitability goal hasn't quite come to fruition yet, and Meta doesn't expect it to do so during 2022 whatsoever. In Zuckerberg's words, "but longer term that is our goal and our expectation." So far, revenue from the Family Of Apps segment that covers Meta's more social media-minded properties remained roughly flat (give or take $100 million or so) for both the quarter and first half of the year at $28.37 billion and $55.58 billion respectively. Income, meanwhile, saw small dips in both timeframes, with income coming in at $11.16 billion for the quarter (down from $14.8 billion) and $22.65 billion (down from $28 billion).

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